Is Nebius Set to Win Big in AI Infrastructure?

Published Date : 14/08/2025 

Nebius Group, an AI infrastructure company, has seen its stock surge after releasing strong second-quarter results. With a growing total addressable market and a solid balance sheet, could this be the next big winner in the AI sector? 

Nebius shares have skyrocketed after the company raised already lofty expectations. This surge could just be the beginning of a significant upward trend.

Investors are becoming increasingly familiar with artificial intelligence (AI) infrastructure company Nebius Group (NBIS). While it has been somewhat under the radar, Nebius recently released its second-quarter update, which has drawn significant attention. The updated revenue guidance boosted the stock after the report, but there may be more room for shares to run. Nebius founder and CEO Arkady Volozh summarized the company's potential with this comment from the quarterly press release: 'Demand for AI infrastructure -- compute, software, and services -- is only going to get stronger as use cases multiply.'

Nebius' history helps to explain why it has been an underrated AI play. Nebius Group was formed after its original holding company sold the Yandex search engine assets to Russian investors following the invasion of Ukraine. The remaining assets, based in Amsterdam, focused on investing and scaling data center AI infrastructure. The newly formed company now has a global presence with hubs in Europe, North America, and the Middle East.

Nebius operates in four business segments:

- Nebius (cloud infrastructure): The primary business focuses on delivering infrastructure through a network of data centers designed for AI workloads. This includes large-scale GPU clusters, cloud platforms, and tools for developers.

- Toloka: A data partner with a network of human specialists to train and evaluate AI large language models (LLMs).

- TripleTen: A technology platform for educating and reskilling individuals for tech careers, leveraging AI-driven educational tools.

- Avride: Autonomous driving technology for self-driving cars and delivery robots, targeting sectors including ride-hailing and food delivery.

In 2024, revenue totaled only $117.5 million, but that was an increase of 462% from the previous year. Investors have taken notice of the company's cloud infrastructure growth. Entering 2025, management boldly predicted it would drive revenue growth quickly enough to achieve an annualized revenue run rate of $750 million to $1 billion by the end of this year. After second-quarter earnings, that guidance was boosted, and investors noticed.

Nebius reported second-quarter results on Aug. 7 and impressed investors with sales that rocketed 625% higher year over year and more than doubled from the first quarter. That led management to increase guidance to achieve an annualized revenue run rate of between $900 million and $1.1 billion by the end of this year.

The stock soared after investors heard that update. Exponential revenue increases are being driven by its burgeoning AI infrastructure services. Just as importantly for investors, Nebius has a solid balance sheet. It held $1.68 billion in cash as of the end of Q2, an increase from $1.44 billion three months prior. Nebius raised $1 billion during the quarter by issuing convertible notes, but still has an enviable balance sheet with its growing cash balance.

Nebius is addressing the growing role of AI as a transformative force by building specialized infrastructure needed for AI's development. The company is rapidly scaling infrastructure that includes extensive computing resources, optimized software and hardware, and collaborative ecosystems. Its cloud platform features large-scale GPU clusters in the U.S. and Europe, offering customers of all sizes scalability, flexibility, and reliability, along with the performance capabilities of a supercomputer.

In Q2, Nebius grew business on the enterprise side, adding well-known, large global technology companies, including Cloudflare and Shopify. The other business segments are also in growth mode. Avride has established partnerships with Uber Technologies, food-delivery platform Grubhub, and Hyundai.

With AI increasingly playing a role in sectors beyond technology, such as healthcare, finance, entertainment, and robotics, the total addressable market (TAM) is huge. While the post-earnings stock surge might scare off potential new investors, Nebius' valuation remains reasonable as long as its revenue growth continues. A price-to-sales (P/S) ratio of about 16 based on an end-of-year revenue run rate isn't cheap. However, with tailwinds for needed cloud-based compute power and AI infrastructure, that revenue should continue to grow through 2026 and beyond.

That could make Nebius stock look cheap in the rearview mirror. 

Frequently Asked Questions (FAQS): 

Q: What is Nebius Group?

A: Nebius Group is an AI infrastructure company that focuses on delivering specialized infrastructure through a network of data centers designed for AI workloads. It also operates in data training, tech education, and autonomous driving technology.

Q: Why has Nebius been under the radar?

A: Nebius Group was formed after its original holding company sold the Yandex search engine assets to Russian investors following the invasion of Ukraine. The remaining assets, based in Amsterdam, focused on investing and scaling data center AI infrastructure, making it a relatively new and under-the-radar player in the AI space.

Q: What are Nebius' key business segments?

A: Nebius operates in four main segments: Nebius (cloud infrastructure), Toloka (data training), TripleTen (tech education), and Avride (autonomous driving technology).

Q: What was Nebius' revenue growth in the second quarter?

A: Nebius reported a 625% increase in sales year over year and more than doubled from the first quarter, leading to an updated guidance for an annualized revenue run rate of between $900 million and $1.1 billion by the end of the year.

Q: What is the total addressable market (TAM) for AI infrastructure?

A: The total addressable market (TAM) for AI infrastructure is vast, encompassing sectors beyond technology, such as healthcare, finance, entertainment, and robotics. This growing market presents significant opportunities for companies like Nebius. 

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