Nvidia simply invested in an Amsterdam-based AI infrastructure firm.
Typically talking, when companies generate extra income, they could select to make investments in areas similar to analysis and growth (R&D), bolster advertising budgets, or enhance hiring efforts in sure departments. Nonetheless, from time to time, an organization could make investments in different companies and purchase a small fairness stake.
In 2024, a 13F filing revealed that semiconductor large Nvidia has possession positions in six publicly traded firms — Utilized Digital, Arm Holdings, Nano-X Imaging, Recursion Prescription drugs, Serve Robotics, and SoundHound AI.
Inside this portfolio, none has gained extra consideration than SoundHound. Over the final 12 months, shares of the voice-recognition synthetic intelligence (AI) firm have soared by 950%. Certainly, SoundHound AI is a tempting alternative for AI investors.
However, I would warning towards shopping for a inventory with this magnitude of momentum and as a substitute advocate in search of out various concepts. Just lately, an organization referred to as Nebius Group (NBIS 1.06%) got here to my consideration. The primary purpose I found the corporate? As a result of Nvidia has an funding in the enterprise.
Under, I am going to clarify how Nebius and Nvidia are working collectively and make the case for why this under-the-radar AI inventory could possibly be a profitable alternative in 2025 and past.
Nebius has an attention-grabbing historical past
I would not be stunned should you’ve by no means heard of Nebius. Nonetheless, you may be aware of Yandex, an organization Nebius was affiliated with beforehand.
Yandex is a Russian-based web conglomerate, related to what Alphabet‘s Google is for the U.S. and lots of Western nations. Following Russia’s invasion of Ukraine in February 2022, the U.S. and European Union imposed quite a lot of sanctions on Russia, a lot of which had been geared toward limiting the nation’s means to conduct enterprise with different nations.
In response to these sanctions, Yandex accomplished an advanced transaction via which it successfully divested its non-Russian belongings. Consequently, Nebius (which relies in Amsterdam) turned an impartial entity and listed on the Nasdaq Stock Market again in October.
Following its itemizing, Nebius introduced a non-public placement on Dec. 2. Per the transaction particulars, the corporate issued 33.3 million shares at a value of $21 every, basically elevating $700 million from the likes of Nvidia and venture capital (VC) agency Accel.
Picture supply: Getty Pictures.
The corporate’s development is spectacular, and the outlook is even higher
Nebius’ main market is AI infrastructure, constructing graphics processing items (GPU) clusters and cloud-based platforms. Nonetheless, the corporate additionally operates in different areas, together with generative AI, autonomous driving, and technology-based training, via its subsidiaries Toloka, Avride, and TripleTen.
This previous October, Nebius reported financials for the third quarter. Income elevated by 766% 12 months over 12 months to $43.3 million — with the AI infrastructure enterprise comprising roughly two-thirds of complete gross sales.
Of observe, Nebius’ cloud enterprise rose virtually threefold quarter over quarter and is now working at an annualized run rate of $120 million. Whereas these numbers could seem a tad small, it is the corporate’s ahead guidance that excites me most.
Following the information of its capital increase that includes Nvidia, Nebius’ administration is projecting the corporate’s annual recurring revenue (ARR) run charge to attain up to $1 billion by the top of 2025.
Whereas this represents an almost tenfold enhance from present ranges, hold in thoughts that liquidity is just not a problem for Nebius — which boasted $2.3 billion of money and equivalents on the steadiness sheet as of Sept. 30.
Moreover, with greater than $1 trillion projected to be spent on AI infrastructure in the close to time period and Nebius’ significance in Nvidia’s ongoing Blackwell GPU roll-out, I feel the corporate is subtly positioned to have a monster 12 months.
Is Nebius inventory a purchase in 2025?
Given its restricted buying and selling historical past, buyers could understandably have some trepidation scooping up shares in a comparatively unknown AI inventory. However proper now, Nebius’ share value of $31 is fairly shut to the center of its excessive and low factors since itemizing on the Nasdaq a number of months in the past.
The corporate has taken correct measures to guarantee satisfactory monetary horsepower to meet its near-term targets — together with a $1 billion information heart growth throughout Paris and Finland, fueled by ongoing demand for Nvidia GPU clusters.
To me, the true profitable alternative with Nebius revolves round whether or not the corporate can parlay its work with Nvidia by forming partnerships with different giant chip gamers, similar to Advanced Micro Devices, and dealing extra intently with cloud hyperscalers, similar to Oracle, Microsoft, Amazon, and Alphabet.
I feel Nebius’ present roadmap is compelling sufficient for AI buyers to think about a place in their portfolio. The corporate’s worldwide presence supplies an additional layer of diversification, and its ties to Nvidia definitely do not harm.
On the finish of the day, I feel Nebius is one to watch all through 2025 and will make a terrific alternative for affected person buyers.
John Mackey, former CEO of Complete Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. Suzanne Frey, an govt at Alphabet, is a member of The Motley Idiot’s board of administrators. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Idiot has positions in and recommends Superior Micro Units, Alphabet, Amazon, Microsoft, Nebius Group, Nvidia, Oracle, and Serve Robotics. The Motley Idiot recommends the next choices: lengthy January 2026 $395 calls on Microsoft and brief January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure policy.