To The Moon

$NEBIUS(NBIS)$

NBIS Group has reported its quarterly earnings, and in today's video, we'll dive into the details. If you recall, we first recommended this stock back in December and later provided an update following the Deep Seek situation—both turned out to be strong buying opportunities. Year-to-date, NBIS shares have climbed 47%. However, as I record this, we’re seeing some declines in regular trading.

We'll take a technical look at the stock and discuss whether this dip presents another buying opportunity—whether you're holding shares or considering adding to your position. We'll also break down the financials. Notably, the company has raised $700 million, including an investment from Nvidia. We'll discuss what this means and connect the dots on their H100 and H200 GPU allocations, as well as their specific Blackwell allocation, which was an interesting detail from the earnings call.

Surprisingly, there's not much mainstream coverage on this. Shoutout to Investing.com for providing a transcript of the earnings call—we'll highlight some key insights and share my take on them. Beyond that, there are aspects of this company that many investors overlook. NBIS operates multiple business units, but due to the lack of analyst coverage—something the company itself acknowledged on the call—many people are unaware of these other ventures. For instance, NBIS is involved in autonomous vehicle technology, including a food-delivery robot currently in use at Ohio State University in partnership with Uber, DoorDash, and Grubhub.

For those who have been following us, you'll remember John—our small-cap expert at Empire. He initially recommended this stock, and his track record with small-cap picks has been outstanding. The NBIS story just keeps getting better. Previously, the company operated as a Russian-based search engine—essentially the "Google of Russia." However, due to geopolitical events in recent years, the company separated from that business and re-established itself as a Netherlands-based entity.

Despite essentially being a "startup," NBIS has decades of experience in its field. The company's recent $700 million fundraising was oversubscribed, bringing its total cash reserves to over $2.5 billion. With a current market valuation of around $10 billion, that means roughly 25% of its value is in cash. Of course, they are burning through capital as they scale, but this financial strength is significant.

Now, let’s talk about Nvidia. By examining a company like NBIS, we can draw connections to Nvidia and other semiconductor firms. Given its role in the AI and cloud infrastructure space, strong demand at NBIS suggests similar trends at major cloud providers like Amazon, Google Cloud, and Microsoft Azure. NBIS is also expanding in the U.S., with a new facility in Kansas City launching an initial 5MW phase, with the potential to scale up to 40MW.

Regarding Nvidia hardware, NBIS disclosed that it will receive 22,000 Blackwell GPUs, set to be deployed in its U.S. and Finland data centers by 2025. This level of transparency suggests a strong partnership with Nvidia. The company also projected an annualized revenue run rate of $750 million to $1 billion by the end of 2025, with a significant portion coming from its cloud division, where it leases out Nvidia GPUs.

For context, NBIS is currently valued at about 10x its projected 2025 revenue—much lower than some high-growth AI stocks that trade at 100x sales. Additionally, as of March, the company's contracted revenue run rate stands at $220 million, reinforcing its trajectory toward that $1 billion target.

Beyond cloud computing, NBIS is making moves in autonomous technology. Its AV Ride platform has partnered with Uber Eats to deploy autonomous food-delivery robots in Austin, Dallas, and Jersey City. At Ohio State University, the company is rolling out smaller autonomous delivery bots. While these may not yet be common in many areas, in some cities, they are already a regular sight.

With exposure to two high-growth sectors—autonomous delivery and AI/cloud infrastructure—NBIS is in a strong position. Once major firms like Goldman Sachs, Morgan Stanley, and Wells Fargo initiate coverage, the stock could gain even more traction.

On the cloud front, NBIS is just beginning to receive Blackwell GPUs, and demand is intense. AI startups are competing for access, often committing to year-long or multi-year reservations—effectively guaranteeing revenue for companies like NBIS. While older GPUs like the H100 and H200 have wider availability, Blackwell contracts are expected to be longer-term due to higher demand and limited supply.

From a financial standpoint, NBIS estimates a 2.5–3 year payback period for its GPU investments, meaning it will likely operate at a financial loss in the short term. This is similar to a real estate investment model—where upfront costs are high, but rental income (in this case, GPU leases) eventually offsets the initial expense.

We'll go deeper into the financials in a moment, but overall, NBIS is positioned as a key player in two cutting-edge industries. Let’s break down what this means for investors.

Nvidia generates substantial revenue from its H100 and H20 GPUs, leasing them out over extended periods, similar to real estate investments. With the upcoming Blackwell GPUs, the expected payback period is estimated to be around two to three years, though it’s still early to determine exact figures.

A key advantage Nvidia holds is its expertise in building high-power, energy-efficient infrastructure, which helps lower costs compared to its "neocloud" competitors. The term "neocloud" refers to cloud providers outside of major hyperscalers like Microsoft, Google, Amazon, and Oracle. These smaller cloud companies cater to mid-sized businesses or those needing specialized services, offering greater customization and customer support.

One company leveraging this expertise has experience building data centers in Russia, giving it both a startup mentality and deep industry knowledge. This unique combination made it an attractive investment opportunity back in December. The company is now developing its own hardware and capitalizing on the rising demand for Nvidia H20 GPUs. With AI investment booming, particularly in Silicon Valley, this trend is expected to last through 2025 and into 2026.

Recent AI advancements, such as DeepSeek’s rapid rise in popularity and Elon Musk’s xAI launching Grok, demonstrate the sector’s fast-paced growth. These shifts attract investors eager to support companies that can quickly scale from unknown to industry leaders, further fueling demand for high-performance GPUs like Nvidia’s H100s, H200s, and Blackwell.

Financially, the company reported $37.9 million in revenue, reflecting massive year-over-year growth (potentially 500-600%). However, as a startup, its costs remain high. The cost of revenue was $27 million, product development reached $35 million, and sales/general expenses hit $90 million, meaning the company operates at a loss. Investors in growth companies must accept volatility, as the company burns through cash to expand operations.

Total operating expenses for the quarter were $189 million against $37 million in revenue, making sustained growth essential. The company has $2.5 billion in cash, but with $417 million in capital expenditures for three months and $808 million over a year, it will likely need another fundraising round later in the year. The business model mirrors real estate investments, requiring upfront capital for long-term returns.

Beyond cloud services, the company has other rapidly growing business units:

• Toloka: A machine learning AI platform supporting computer vision applications, growing 140% year-over-year.

• TripleTen: An education platform offering coding boot camps, growing 100% annually.

• AI & Autonomous Vehicles (AVs): A key segment, with 100 delivery robots already deployed at Ohio State University and partnerships with Uber Eats in Austin and Dallas. Japan certification is also in progress.

These ventures, combined with the company’s cloud business generating $220 million in ARR, present significant upside potential. Despite stock price fluctuations, the long-term growth trajectory looks strong.

Unlike stable tech giants like Google or Microsoft, this stock will experience higher volatility, swinging 7-10% in a single day. Investors must be prepared for such movements. While some prefer the security of blue-chip stocks, others are drawn to the growth potential of emerging tech firms.

Currently, the company remains largely undiscovered by major financial institutions like Goldman Sachs or Morgan Stanley. However, as it gains visibility through investor roadshows and conferences, coverage will increase, potentially driving further interest. With expected annual revenue surpassing $1 billion and a $10 billion valuation, the company remains an exciting opportunity in the AI-driven cloud market.

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Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.