Nebius Group: A Rising Star in the AI Revolution
Nebius Group, a data center stock once owned by Russian internet giant Yandex, is making waves in the AI infrastructure sector. With a strategic investment from Nvidia and ambitious expansion plans, the company is poised for significant growth.
Nebius GroupAi InfrastructureNvidiaData CentersBlackwell GpusReal Estate PuneFeb 25, 2025
While SoundHound AI's voice recognition technology is an exciting pocket of the AI realm, the main contributor to the company's outsized price movement was linked to a strategic investment by Nvidia.
This highlights the significant impact that investments from tech giants can have on smaller, specialized AI firms.
Like financial institutions, companies are required to report their ownership positions in other businesses through a 13F filing.
According to Nvidia's most recent 13F, the company exited its position in SoundHound AI and took a stake in a data center stock called Nebius Group (NASDAQ NBIS).
If you're unfamiliar with Nebius, don’t worry.
The company is flying under the radar for a reason -- but that may not last too much longer.
I'll explore how Nebius is playing a critical role in the AI revolution and assess why the company's valuation appears reasonable right now.
Nebius was once owned by a Russian internet conglomerate called Yandex.
However, following Russia's invasion of Ukraine, the U.S.
and European Union (E.U.) placed sanctions on Russia, which resulted in some intriguing business decisions.
As it pertains to Yandex, the company spun off non-Russian subsidiaries -- Nebius being one of them.
Following this transaction, Nebius listed on the Nasdaq Composite as its own independent, publicly traded company.
Shortly after debuting on the Nasdaq, Nebius conducted an equity financing round in which it raised $700 million.
This is the round Nvidia participated in; hence the company's stake in Nebius became public news, required to be reported in a 13F.
Back in September, Nebius announced that it is investing $1 billion for an AI infrastructure across Finland and France.
As part of the rollout, Nebius will be constructing data centers equipped with clusters of Nvidia's Hopper and Blackwell graphics processing units (GPU).
On top of that, the company is also expanding its influence in the U.S.
as it's launching a new data center in Kansas City, which will feature more Blackwell GPUs.
Given the company is beginning to make a splash here in the U.S.
and its close ties to Nvidia, I wouldn't be surprised to see Nebius become more integrated with other ongoing AI infrastructure projects -- namely from hyperscalers such as Microsoft, Amazon, and Alphabet.
According to the company's press release for fourth-quarter earnings, annual recurring revenue (ARR) is expected to reach at least $220 million by the end of the first quarter (March) \
Frequently Asked Questions
What is Nebius Group?
Nebius Group is a data center stock that was once owned by the Russian internet conglomerate Yandex. It has since become an independent, publicly traded company listed on the Nasdaq Composite.
Why did Nvidia invest in Nebius?
Nvidia invested in Nebius as part of the company's $700 million equity financing round. This investment is strategic, given Nvidia's leading position in AI hardware and Nebius's ambitious plans for AI infrastructure.
What is Nebius's expansion plan?
Nebius plans to invest $1 billion in AI infrastructure across Finland and France, constructing data centers equipped with Nvidia's Hopper and Blackwell GPUs. Additionally, the company is expanding into the U.S. with a new data center in Kansas City.
What is the current ARR projection for Nebius?
Nebius expects its annual recurring revenue (ARR) to reach at least $220 million by the end of the first quarter (March) based on contracts already in place. The company's CEO also stated that the December ARR goal of $750 million to $1 billion is well within reach.
How does Nebius fit into the broader AI market?
Nebius is becoming a significant player in the AI infrastructure market, particularly through its partnerships with tech giants like Nvidia and its expansion plans in key markets. Its data centers equipped with advanced GPUs are crucial for supporting the growing demands of AI applications.
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