Nvidia-Backed AI Stock to Watch in 2025: Nebius Group

Published Date : 07/01/2025 

Discover why Nebius Group (NBIS), an Amsterdam-based AI infrastructure company backed by Nvidia, could be a lucrative investment in 2025. Learn about its impressive growth, strategic partnerships, and future outlook. 

Nvidia, a semiconductor giant, has made a significant investment in an Amsterdam-based AI infrastructure company called Nebius Group.

This investment is part of a broader strategy where Nvidia has stakes in several companies, including Applied Digital, Arm Holdings, Nano-X Imaging, Recursion Pharmaceuticals, Serve Robotics, and SoundHound AI.

While SoundHound AI has seen a massive 950% increase in its stock price over the last 12 months, I believe Nebius Group (NBIS) is a more compelling and less risky AI stock to consider for 2025 and beyond.

Nebius Group An Unexpected JourneyNebius Group has an interesting backstory.

It was previously part of Yandex, a Russian internet conglomerate similar to Alphabet's Google.

Following the sanctions imposed by the U.S.

and European Union on Russia after the invasion of Ukraine in 2022, Yandex divested its non-Russian assets.

This led to the creation of Nebius, which was listed on the Nasdaq in October 2022.

On December 2, 2022, Nebius announced a private placement, issuing 33.3 million shares at $21 each, raising a total of $700 million.

This capital was contributed by Nvidia and venture capital firm Accel, highlighting the company's strong financial backing.

Impressive Growth and Strategic VisionNebius' primary focus is on AI infrastructure, developing GPU clusters and cloud-based platforms.

The company also operates in other areas such as generative AI, autonomous driving, and technology-based education through its subsidiaries Toloka, Avride, and TripleTen.

In the third quarter of 2023, Nebius reported a 766% increase in revenue year over year, reaching $43.3 million.

The AI infrastructure business accounted for about two-thirds of this revenue.

Notably, Nebius' cloud business grew almost threefold quarter over quarter and is operating at an annualized run rate of $120 million.

Nebius is projecting its annual recurring revenue (ARR) to reach up to $1 billion by the end of 2025, a nearly tenfold increase from current levels.

With $2.3 billion in cash and equivalents as of September 30, 2023, Nebius is well-positioned to meet its financial goals and expand its operations.

Market Potential and Strategic PartnershipsThe global AI infrastructure market is expected to see substantial growth, with over $1 trillion projected to be spent in the near term.

Nebius' strategic partnership with Nvidia, particularly in the roll-out of the Blackwell GPU, positions it well to capitalize on this growth.

Nebius is also expanding its data center infrastructure with a $1 billion investment in data centers across Paris and Finland, driven by the increasing demand for Nvidia GPU clusters.

This expansion will further solidify Nebius' role in the AI ecosystem.

Is Nebius a Buy in 2025?Despite its limited trading history, Nebius' share price of $31 is relatively stable, falling in the middle of its high and low points since listing on the Nasdaq.

The company has taken measures to ensure financial stability, including a strong cash position and strategic partnerships.

The real opportunity lies in Nebius' potential to form additional partnerships with other large chip players like Advanced Micro Devices and cloud hyperscalers such as Oracle, Microsoft, Amazon, and Alphabet.

This diversification and strategic positioning could make Nebius a lucrative investment for AI-focused investors.

Nebius' current roadmap, international presence, and ties to Nvidia make it a compelling addition to any AI portfolio.

For patient investors, 2025 could be a breakout year for Nebius, and it's certainly a stock to watch closely. 

Frequently Asked Questions (FAQS):

Q: What is Nebius Group?

A: Nebius Group is an Amsterdam-based AI infrastructure company that focuses on developing GPU clusters and cloud-based platforms. It was spun off from Yandex, a Russian internet conglomerate, and is backed by Nvidia and Accel.

Q: What is the current share price of Nebius Group?

A: As of the latest report, Nebius Group's share price is around $31, which is in the middle of its high and low points since listing on the Nasdaq a few months ago.

Q: How much did Nebius Group raise in its private placement?

A: Nebius Group raised $700 million through a private placement, issuing 33.3 million shares at $21 each, with contributions from Nvidia and venture capital firm Accel.

Q: What is Nebius Group's projected annual recurring revenue (ARR) for 2025?

A: Nebius Group is projecting its annual recurring revenue (ARR) to reach up to $1 billion by the end of 2025, representing a nearly tenfold increase from current levels.

Q: What are some of Nebius Group's key business areas?

A: Nebius Group primarily operates in AI infrastructure, building GPU clusters and cloud-based platforms. It also operates in generative AI, autonomous driving, and technology-based education through its subsidiaries Toloka, Avride, and TripleTen. 

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