Is Nebius Group Stock a Buy?

Key Points

• The Russian tech giant Yandex rebranded itself as Nebius last year.

• As Nebius, it’s focused on expanding its AI infrastructure business.

• Its business is firing on all cylinders, and its stock still looks reasonably valued.

• 10 stocks we like better than Nebius Group ›

Nebius Group (NASDAQ: NBIS) was once known as Yandex, the online search leader in Russia. However, the sanctions against Russia after its invasion of Ukraine derailed its expansion plans and rattled its overseas investors, and its Nasdaq-listed shares were suspended on Feb. 28, 2022.

To reboot its business, Yandex divested its core search engine and other Russian assets, retained its non-Russian business segments; and reinvented itself as a cloud-based provider of artificial intelligence (AI) infrastructure services. It then rebranded itself as Nebius and started trading on the Nasdaq again on Oct. 21, 2024.

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Nebius' stock resumed trading at $14.29, and it now trades at about $110. It dazzled its investors with its rapid growth and a massive AI deal with Microsoft (NASDAQ: MSFT), but is its stock still worth buying today? Let's review its growth rates and valuations to decide.

Image source: Getty Images.

What does Nebius do?

Nebius fully owns one data center in Finland, and it leases additional data centers through colocation deals in Missouri, France, and Iceland. It's currently constructing another first-party data center in New Jersey, and it recently secured another colocation deal in the U.K.

Nebius initially installed Nvidia's (NASDAQ: NVDA) H100, H200, and L40S GPUs -- all of which are used to process complex AI tasks -- in its data centers. It serves up its AI infrastructure as a cloud-based service to companies that don't want to buy those pricey and power-hungry GPUs, and it integrates other managed services, developer tools, and apps into its platform.

How does it compare to CoreWeave?

Nebius might seem similar to CoreWeave (NASDAQ: CRWV), another provider of cloud-based GPUs for AI applications, which operates 33 data centers in the U.S. and Europe. However, Nebius brands itself as a "full stack" AI infrastructure company that integrates cloud-based GPUs with managed services like Kubernetes and PostgreSQL. CoreWeave mainly processes GPU-intensive workloads instead of handling smaller managed services.

Nvidia owns 0.5% of Nebius and approximately 6.4% of CoreWeave. That support suggests their cloud-based GPUs will become increasingly popular as the AI market evolves and expands. Both companies also started deploying Nvidia's latest Blackwell GPUs over the past year.

In early September, Nebius signed a five-year $17.4 billion AI infrastructure deal with Microsoft. CoreWeave also generates roughly 70% of its revenue from Microsoft, and it recently beefed up the value of its existing contracts with OpenAI by another $6.5 billion to $22.4 billion.

How fast is Nebius growing?

In 2024, Nebius' revenue surged 462% to $117.5 million. From 2024 to 2027, analysts expect its revenue to grow at a CAGR of 231% to $4.25 billion as it opens more data centers, gains more customers, and starts to recognize the revenue from its new deal with Microsoft.

They also expect its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which came in at negative $266.4 million in 2024, to turn positive in 2026 and surge 186% to $852 million in 2027. That growth should be driven by its partnership with Microsoft, its goal of boosting its data center capacity from roughly 190 megawatts (MW) today to 1 gigawatt (GW) by 2026, and a recent $3 billion funding round to support those ambitious plans.

With an enterprise value of $25.02 billion, Nebius trades at about 6 times its projected sales for 2027. By comparison, CoreWeave -- which is valued at $83.19 billion -- trades at less than 5 times its expected sales for 2027. So while both of these AI infrastructure stocks look pricey relative to this year's sales, they still seem reasonably valued relative to their long-term growth potential.

Is it the right time to buy Nebius' stock?

Nebius, like CoreWeave, will burn a lot of cash, issue more shares, and take on more debt to open new data centers and purchase more GPUs from Nvidia. But over the next few years, Nebius could thrive as more companies shift their AI processing to cloud-based GPUs. Therefore, I believe its stock is still worth accumulating near its all-time highs.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft and Nvidia. The Motley Fool recommends Nasdaq and Nebius Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.