Nebius AI

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Welcome to our new subscribers! We’re excited to have you with us as we continue our journey to educate and highlight some of our favorite stock picks. This week, we're focusing on a stock that has been pumping, up 152% YTD but is not very well known. We actually bought into this company when it was sitting at $48.52, with it now sitting around $70, we still think it has a lot of potential left. We think with the right strategic partnerships and continued off-spin ventures it could continue to grow rapidly.

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Background Information:

Nebius is basically a new-old company was derived of Yandex’s international business after the Russian tech giant sold off its assets in 2024. Yandex’s former CEO took the reins and turned Nebius into a pure AI infrastructure company based in Amsterdam. Where Nebius plays its part in the world of AI is being able to build their own massive data giant data centers that are able to handle some of the most powerful GPUs in the world (NVIDIA’s H100s, H200s, Blackwell chips, and even the next-gen GB200s). Developers and startups then rent this power to train and run AI models without having to build their own server farms, potentially saving them billions from a short use case. As of now they are one of the only companies that could build these massive AI stacks that could handle the amount of compute needed to run these types of AI tests. Just this past year, Nebius raised $700 million in fresh funding from big-name backers like NVIDIA and venture capital firm Accel. That cash is helping it expand aggressively, building new clusters in Europe and the U.S.

What Caught Our Eye:

The real kicker is Nebius’s partnership with NVIDIA. This isn’t just NVIDIA writing a check, it’s a deep partnership. Nebius became an official NVIDIA Cloud Partner, which is a big deal because it means they’re recognized as one of the few providers running NVIDIA’s GPUs exactly how NVIDIA wants them to be used. They’re also part of NVIDIA’s Inception Program, which supports early stage AI companies. Through Nebius’s version of this (they call it AI Lift), startups can get up to $150,000 worth of free Nebius cloud credits, fast-tracked access to scarce GPUs, and extra engineering support. In practice, that means smaller companies biotech startups training protein folding models or a smart city company building real-time traffic, AI can compete with the big players without blowing millions upfront. Between the credits, cheaper GPU pricing, and NVIDIA’s backing, Nebius is putting itself in position to be a go-to alternative to the heavyweights like AWS and Azure.

Behind the Numbers of their recent earnings:

This chart is from Nebius’s latest earnings. In just two quarters, the company’s revenue shot up from $35.2 million in Q424 to $105.1 million in Q225, a 200% jump year-over-year in Q4 and another 106% boom in Q1, headlines by more than tripling revenues in only six months. In the AI infrastructure world, where building new data centers and securing GPUs usually takes time, this kind of acceleration is rare. It signals that Nebius isn’t just growing steadily, but expanding its growth rapidly

There are a few major factors driving this growth. Demand for NVIDIA’s H100 and H200 chips has gone through the roof, and Nebius has been quick to deploy them in Europe and the U.S. where supply is scarce. Programs like AI Lift are pulling in early stage AI companies who need serious compute but can’t afford AWS-scale bills. Many are turning into long-term customers. Larger clients like governments including Israel are choosing Nebius because of its speed, security, and cost efficiency. For context, most cloud companies fight for single-digit or low double-digit quarterly revenue growth. Nebius just pulled off triple-digit gains two quarters in a row, and it’s still early in its expansion cycle. Investors love this type of curve because it hints at runaway adoption. If Nebius can keep this up, it won’t just be an “up-and-coming” AI cloud, it could cement itself as one of the fastest-scaling players in the entire infrastructure game.

Highlighting the Major Customers and Partners:

Nebius AI isn’t just building data centers, it’s landing some big-name customers. On its buyer list are Cloudflare, Prosus, and Shopify, all well-known names that signal trust in Nebius’s infrastructure. Beyond these headline clients, the company also supports its spin offs and affiliated ventures like Avride (with partners Uber, Grubhub, and Hyundai) and TripleTen, which onboarded more than 6,000 new AI-powered students in Q2 alone.

As an investor, we noted in our analysis that these companies represent a growing ecosystem of companies, from global tech platforms to education startups that are using Nebius’s infrastructure. While they continue to expand into the UK, Israel, and Finland they will build more credibility into the AI market, which is the future.

Tokola within the Nebius Group:

Nebius Group has backed Toloka, a data solutions company spun out of Yandex, as part of its broader strategy to strengthen the AI ecosystem around its cloud platform. Toloka is a crowdsourcing and synthetic data platform that helps companies build, clean, and label the massive datasets required for machine learning. Think of it as an engine that provides the “fuel” AI models need—structured, accurate data. With clients across industries like e-commerce, fintech, and autonomous vehicles, Toloka helps speed up AI development while lowering costs.

The Thesis:

Our thesis is built off the expanding growth of AI and the need for infrastructure to allow smaller AI startups to succeed in this new world. Most small companies right now can not afford to go out ans build their own data centers to compete with major players, let alone get the GPUs needed to do exactly what they are deciding to do, which could be from everything from biotech AI to fitness AI. Right now, AI companies are fighting over who can get the most GPUs and offer the fastest, cheapest cloud services. Companies like Amazon, Microsoft, and Google own most of the market currently, and have a stronghold on the industry. We think over the next couple of years with NVIDIA’s backing, lots of fresh funding, and perks like free credits and guaranteed GPU access, Nebius could position itself in a prime situation to cater to smaller companies who are looking to enter into AI. Companies are quickly realizing that the world of AI is an eat or be eaten world and will be quick to throw capital expenditure into incorporating AI into their business. If Nebius keeps moving at their current pace, they could become one of the largest “new cloud” providers powering the next wave of AI companies. Although we always like to be hevaily invested into Nvidia, Microsoft, and other tech giants, it is important to diversify and find every angle of this new AI age. As of now our newsletters have suggested energy companies, AI infrastructure, and the future of banking. We believe Nebius is still a buy right now around $70 and sit in our portfolio as a long-term stock. We think the future will continue to be bright and cannot wait to see where this stock takes off.

Thanks for reading. We hope that you have a great rest of your week!

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The information provided in this newsletter is for educational and informational purposes only and should not be considered financial, investment, or legal advice. I am not a licensed financial advisor, and the opinions expressed are my own. Any investments, trades, or financial decisions you make are at your own risk. Always do your own research and consult with a qualified professional before making financial decisions. Past performance is not indicative of future results.