Why Nebius Group Stock Soared Higher Today

Shares of artificial intelligence (AI) cloud service provider Nebius Group (NASDAQ: NBIS) are surging today. The stock jumped after one independent equity research firm began coverage on the stock with a very bullish outlook.

Nebius stock was trading higher by 19.5% as of 11:05 a.m. ET.

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A growth story that's just beginning

London-based Arete Research analyst Andrew Beale began coverage of the stock with a "buy" rating and a price target that seems to have taken investors by surprise. Reports say Beale set $84 as his price target, which represents a 113% increase over Wednesday's closing price.

The analyst sees that significant upside after the Netherlands-based Nebius recently reported first-quarter revenue growth of 385%. That was off a low base versus last year, but the company sees continued expansion at an accelerated rate.

Beale's optimism stems from the nearly 700% increase in Nebius' annualized revenue run rate. Management expects to at least triple that annualized level of revenue by the fourth quarter of this year. Its AI cloud capabilities are in high demand, and Nebius reports a strong $1.44 billion cash position as of March 31.

That cash will be needed for the continued investment in cloud infrastructure to continue to scale the business. Nebius also announced a $1 billion capital raise on June 2 from the sale of convertible notes.

Nebius also has a partnership with AI leader Nvidia, offering the new Blackwell Ultra AI factory platform to businesses looking "to build the next generation of agentic, reasoning, and physical AI."

Investors still need to consider the risks. In addition to its capital spending needs, Nebius seeks to achieve a goal of positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) later this year. That's one key metric investors should continue to monitor. That would instill more confidence in the stock and the company's ability to continue to achieve its high growth trajectory.

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Howard Smith has positions in Nebius Group and Nvidia. The Motley Fool has positions in and recommends Nebius Group and Nvidia. The Motley Fool has a disclosure policy.