Nebius: An AI Infrastructure Leader

Nebius Group Company Overview

Zacks Rank #3 stock Nebius Group (NBIS) is an artificial intelligence (AI) infrastructure company that offers its customers a full-stack AI solution. Currently, Nebius AI is benefitting from the hottest and fastest-growing area on Wall Street – AI infrastructure. Essentially, the company provides the backbone and compute power for companies like Microsoft (MSFT) and Alphabet (GOOGL) that are building the most powerful AI systems in the world, like the ChatGPT and Gemini large language models (LLMs). Building and training these complex, technologically advanced AI systems requires a massive amount of computer power and equipment.

In simple terms, Nebius is akin to a specialized electricity company, but rather than providing power, the company provides the lightning-fast computer power and technology needed for AI. However, what makes Nebius special and unique is how they offer their products:

·       NBIS has its own supercomputers: Nebius builds and operates its own data centers that it fills with the latest and most advanced graphic processing units (GPUS). In other words, rather than building their own data centers and setting up the complex AI technology themselves, big tech companies like Microsoft can rely on NBIS data centers and use them as a service.

·       NBIS has competitive pricing: Because Nebius is focused solely on AI solutions, the company can provide more competitive pricing than general cloud providers, for example.

·       NBIS offers supplemental products: Nebius’s laser-focus on AI also allows the company to offer a full suite of products that extend beyond just compute power. Its add-on software solutions make running AI models simpler and more efficient.

Nebius has Key Partnerships with Nvidia & Meta

Nebius AI builds proprietary hardware like servers and racks, allowing it to vertically integrate its business. In addition, NBIS has partnered with Nvidia (NVDA) (the top AI chip company) to leverage the industry-best Nvidia GPUs and access powerful ‘GPU clusters’ to run AI models at scale. Meanwhile, Nebius also has an essential partnership with big tech juggernaut Meta Platforms (META). Meta leverages NBIS technology to train its Llama large language model. While the details of the partnership are under wraps, investors should not underestimate the significance of the partnership. META and its iconic CEO Mark Zuckerberg not only spend hundreds of billions of dollars on AI, Zuckerberg is so serious about AI that recent reports claim that he has been poaching top AI talent from other AI leaders, offering staggering $100 million pay packages as incentive.

Nebius Revenue Soars

Though NBIS has benefitted from big customers like META, the most recent earnings call suggests the company is gaining traction with a broad swath of new customers. Zacks Consensus Analyst Estimates suggest that annual revenue will soar at a triple-digit clip for the next two years.

NBIS Shares Break Out

NBIS shares are breaking out of a picture-perfect bull flag pattern as volume swells to more than 60% above the 50-day norm – signaling institutional demand. The pattern sets up potential pre-earnings run into earnings next month.

Bottom Line

Nebius is an AI company positioned at the epicenter of the booming AI infrastructure market. The company’s proprietary supercomputers, full suite of AI solutions, and competitive pricing mean that the stock will likely move much higher from current levels.

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This article originally published on Zacks Investment Research (zacks.com).

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