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$NEBIUS(NBIS)$ $NVIDIA(NVDA)$

In this article, I will be discussing NBIS Group and its stock. I understand why there's a lot of interest in this company, especially since Nvidia was announced as one of its investors. When Nvidia invests in an AI company, it naturally piques the curiosity of investors. In this video, I’ll cover the latest updates and provide insights into what’s happening with NBIS Group. I also want to thank the MLE FO for sponsoring this video. Visit full.com/parev for the 10 best stocks to buy now.

Earning Overview

In the fourth quarter of 2024, Nebius Group reported significant growth in revenue, with a 466% year-over-year increase to $37.9 million, primarily driven by its core AI infrastructure business, which grew 602% year-over-year. Despite this revenue surge, the company faced operational challenges, including longer customer acquisition lead times and the migration to a new AI cloud platform. These factors contributed to an adjusted EBITDA loss of $75.5 million and a net loss from continuing operations of $136.6 million for the quarter.

Fundamental Overview

For the full year 2024, Nebius Group's revenue increased by 462% year-over-year to $117.5 million. However, the company reported an adjusted EBITDA loss of $266.4 million and a net loss from continuing operations of $396.9 million for the year. In December 2024, Nebius Group raised $700 million in an over-subscribed funding round, bringing its total cash and cash equivalents to $2.45 billion as of December 31, 2024.

The company also made significant investments in infrastructure, including the deployment of NVIDIA H200 Tensor Core GPUs in Paris and plans to deploy over 22,000 NVIDIA Blackwell GPUs in data centers in the U.S. and Finland in 2025.

Guidance

During their latest quarterly earnings call on February 20th, 2025, the management team outlined their plans, stating that their goal is to build one of the world’s largest AI infrastructure companies. They believe they’re well-positioned for this due to their proven track record of building and running efficient data centers with stable power and GPU-based computing infrastructure, all designed to support generative AI. This is the sector currently seeing massive investment due to the widespread use of AI services. For example, just yesterday, I read an article about ChatGPT, which now boasts 400 million weekly active users—an increase of 100 million from just a couple of months ago. Additionally, the level of engagement from existing users is also on the rise.

However, using large language models like ChatGPT requires significantly more computational power than typical searches on platforms like Google or Bing. This surge in demand for AI services is driving the need for more computing power, thus increasing the demand for AI-optimized data centers. As a result, this sector is experiencing a boom in spending, which is benefiting companies like Nvidia. I’ve also covered how large hyperscalers like Alphabet, Microsoft, and Amazon are each spending close to $100 billion this year to build AI-optimized data centers. This puts NBIS Group right in the heart of one of the fastest-growing markets.

The company also shared that it went public in October, becoming the first publicly traded AI-specialized cloud company. This happened sooner than expected while they were still working on building out their corporate and business operations. In December, they raised $700 million in a highly successful oversubscribed offering, attracting investments from Nvidia, Excel, Orbis, and others. The fact that Nvidia is an investor in NBIS Group is a major reason why the company is getting so much attention. Not only are they an AI data center company at the forefront of the hottest investment trend right now, but the Nvidia investment has helped push them to the forefront of many investors' minds.

SoundHound Lesson

A similar situation occurred with SoundHound AI when Nvidia’s investment in the company caused a sharp rise in its stock price. However, when Nvidia later announced that it had divested its stake in SoundHound AI, the stock price dropped by 30%. If you're considering investing in NBIS Group because Nvidia is a shareholder, keep this in mind—if Nvidia decides to divest its stake in the future, it could lead to a significant drop in the share price, much like what happened with SoundHound AI. Nonetheless, I always find it reassuring when a company invests in another business within its field, as it shows confidence in that company’s potential.

Nvidia Invest In NBIS

In this case, Nvidia’s investment in NBIS Group signals that Nvidia has confidence in the company. Nvidia understands the AI industry and knows what it takes to succeed in it. Therefore, Nvidia’s decision to invest in NBIS Group is a positive signal, suggesting the company is on the right track. This is an important indicator to consider. If, for example, a company like Home Depot—unrelated to AI—were to invest in NBIS Group, it wouldn’t carry the same weight, as it wouldn't reflect any insight into the AI industry or future success for NBIS Group. But Nvidia’s involvement carries significant meaning, as they have deep expertise in the AI field and understand what makes companies in this space likely to succeed, from management teams to strategies. This makes their investment a strong, positive signal.

NBIS Group has stated that, based on existing contracts, their annualized run rate for March will be at least $220 million. They also mentioned that by December 2025, their annualized revenue could range from $750 million to $1 billion, which seems achievable given their current success. The company is scaling rapidly, almost too quickly, but the demand for their services supports this aggressive growth. However, their ability to meet these revenue targets largely depends on securing GPUs from Nvidia. Since Nvidia is an investor, they’re likely to prioritize NBIS Group when it comes to allocating their products. Keep in mind, Nvidia's products are sold out for up to nine months into 2025, which adds an element of urgency for NBIS Group to secure these resources.

Conclusion

For Nvidia, it's a matter of prioritizing which customers they want to give preferential treatment to in order to receive their inventories sooner rather than later. NBIS Group has already lined up customers and pre-sales for their data centers, which are dependent on Nvidia’s GPUs. They’re just waiting for the GPUs to arrive so they can set up the new data center clusters and begin generating revenue. Everything seems to be going well for NBIS Group as they move quickly and secure revenue. It’s an intriguing company, and I’ll be sure to continue covering their progress in the future.

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.

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