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Nosebleed Valuation: Why Nebius's Microsoft Deal Changes Everything
Nebius Group: An AI Infrastructure Leader
Zacks Rank #3 (Hold) Nebius Group ((NBIS - Free Report) ) is a leading artificial intelligence infrastructure company. The Netherlands-based company’s core business is Nebius, an AI-centric cloud platform built for intensive AI workloads. Nebius builds full-stack infrastructure for AI, including large-scale GPU clusters, cloud platforms and tools, and services for developers.
Nebius’ two main businesses are:
· AI Infrastructure: Mega-cap tech companies like Meta ((META - Free Report) ),Microsoft ((MSFT - Free Report) ), and Alphabet ((GOOGL - Free Report) ) are investing hundreds of billions of dollars in data centers to train and optimize their large language models. With so much capital at stake, they cannot build data centers fast enough and are reliant on companies like Nebius.
· AI Cloud Services: Nebius also offers its AI infrastructure as a service, allowing big tech companies to gain access to resources at a lower cost.
What Sets Nebius Apart from it’s Competitors?
What separates NBIS from most competitors is that it is vertically integrated, meaning it provides its own proprietary AI software and hardware, including servers and racks.
Nvidia Partnership is a Competitive Advantage for Nebius
Nvidia ((NVDA - Free Report) ) is the undisputed chip leader in the AI market. Simply put, if you want to run the best AI models, you need Nvidia’s GPUs. With demand soaring for NVDA GPUs, many companies do not need to wait for Nvidia’s in-demand top-of-the line technology. Not Nebius. Nvidia is both a partner and investor in Nebius. Through the agreement, Nebius enjoys priority access to Nvidia’s latest and most powerful GPUs. Meanwhile, according to the latest filings, Nvidia owns roughly ~$700 million worth of NBIS, meaning it has “skin in the game.”
Have NBIS Shares Run Too Far, Too Fast?
NBIS has a “nosebleed” price-to-sales ratio nearing 100x. Meanwhile, as the AI hype builds on Wall Street Nebius shares have exploded by nearly 400% since going public late last year.
Image Source: Zacks Investment Research
Microsoft Deal is a Gamechanger for Nebius
If there is one lesson I have learned in my two decades of investing, it’s that traditional valuations mean little in a vacuum. Instead, investors must weigh forward growth and fundamental catalysts to get a clear picture. Because of a new bullish catalyst, Nebius is an example of a high valuation stock worth owning.
On September 9th, Nebius landed a massive multi-year deal with Microsoft (MSFT - Free Report) . In a contract worth a whopping $17.4 billion (with potential to get to $19.4B), Nebius will provide Microsoft with access to its Vineland, New Jersey data center, and the valuable GPUs within it.
Nebius/Microsoft Deal in Perspective
The significance of the Microsoft deal for Nebius cannot be understated. In fact, on September 8th, Nebius’ market cap was $15.29 billion. Overnight, the company received a contract worth more than its market cap! Zacks Consensus Estimates now suggest multi-triple-digit revenue growth for the foreseeable future.
Image Source: Zacks Investment Research
The Magical Elixir: A Major Fundamental Sea Change & a High Volume Monster Gap
Following the MSFT contract win, NBIS shares spiked 50% as daily trading volume swelled to 557% above the norm.
Image Source: TradingView
While “chasing” a 50% price gap may feel uncomfortable to investors, history provides historical and relevant context:
2013 Tesla (TSLA): On May 9th, 2013, TSLA shares jumped 24% on volume 7x the norm after the company turned its first-ever quarterly profit. Over the next four months, TSLA shares would run from a split-adjusted $69 to $194.
2025 Oklo (OKLO): On May 23rd, OKLO shares spiked 23% as volume soared 518% above the daily average after pro-nuclear energy legislation passed. Since then, shares have trended from $48 to $84.
2013 Meta Platforms (META - Free Report) : META, formerly Facebook, rose 30% on July 25th, 2013, after the company’s earnings release disclosed unexpected and robust mobile advertising revenue growth. Since then, shares have boomed from $34 to $755 today!
History shows that when married to a groundbreaking, fundamental catalyst, large price gaps are not only buyable but also lead to potentially life-changing returns.
Bottom Line
With its vertically integrated model, strategic Nvidia partnership, and the recently announced, game-changing contract with Microsoft, Nebius Group has positioned itself as a formidable leader in the AI industry.
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Nosebleed Valuation: Why Nebius's Microsoft Deal Changes Everything
Nebius Group: An AI Infrastructure Leader
Zacks Rank #3 (Hold) Nebius Group ((NBIS - Free Report) ) is a leading artificial intelligence infrastructure company. The Netherlands-based company’s core business is Nebius, an AI-centric cloud platform built for intensive AI workloads. Nebius builds full-stack infrastructure for AI, including large-scale GPU clusters, cloud platforms and tools, and services for developers.
Nebius’ two main businesses are:
· AI Infrastructure: Mega-cap tech companies like Meta ((META - Free Report) ), Microsoft ((MSFT - Free Report) ), and Alphabet ((GOOGL - Free Report) ) are investing hundreds of billions of dollars in data centers to train and optimize their large language models. With so much capital at stake, they cannot build data centers fast enough and are reliant on companies like Nebius.
· AI Cloud Services: Nebius also offers its AI infrastructure as a service, allowing big tech companies to gain access to resources at a lower cost.
What Sets Nebius Apart from it’s Competitors?
What separates NBIS from most competitors is that it is vertically integrated, meaning it provides its own proprietary AI software and hardware, including servers and racks.
Nvidia Partnership is a Competitive Advantage for Nebius
Nvidia ((NVDA - Free Report) ) is the undisputed chip leader in the AI market. Simply put, if you want to run the best AI models, you need Nvidia’s GPUs. With demand soaring for NVDA GPUs, many companies do not need to wait for Nvidia’s in-demand top-of-the line technology. Not Nebius. Nvidia is both a partner and investor in Nebius. Through the agreement, Nebius enjoys priority access to Nvidia’s latest and most powerful GPUs. Meanwhile, according to the latest filings, Nvidia owns roughly ~$700 million worth of NBIS, meaning it has “skin in the game.”
Have NBIS Shares Run Too Far, Too Fast?
NBIS has a “nosebleed” price-to-sales ratio nearing 100x. Meanwhile, as the AI hype builds on Wall Street Nebius shares have exploded by nearly 400% since going public late last year.
Image Source: Zacks Investment Research
Microsoft Deal is a Gamechanger for Nebius
If there is one lesson I have learned in my two decades of investing, it’s that traditional valuations mean little in a vacuum. Instead, investors must weigh forward growth and fundamental catalysts to get a clear picture. Because of a new bullish catalyst, Nebius is an example of a high valuation stock worth owning.
On September 9th, Nebius landed a massive multi-year deal with Microsoft (MSFT - Free Report) . In a contract worth a whopping $17.4 billion (with potential to get to $19.4B), Nebius will provide Microsoft with access to its Vineland, New Jersey data center, and the valuable GPUs within it.
Nebius/Microsoft Deal in Perspective
The significance of the Microsoft deal for Nebius cannot be understated. In fact, on September 8th, Nebius’ market cap was $15.29 billion. Overnight, the company received a contract worth more than its market cap! Zacks Consensus Estimates now suggest multi-triple-digit revenue growth for the foreseeable future.
Image Source: Zacks Investment Research
The Magical Elixir: A Major Fundamental Sea Change & a High Volume Monster Gap
Following the MSFT contract win, NBIS shares spiked 50% as daily trading volume swelled to 557% above the norm.
Image Source: TradingView
While “chasing” a 50% price gap may feel uncomfortable to investors, history provides historical and relevant context:
2013 Tesla (TSLA): On May 9th, 2013, TSLA shares jumped 24% on volume 7x the norm after the company turned its first-ever quarterly profit. Over the next four months, TSLA shares would run from a split-adjusted $69 to $194.
2025 Oklo (OKLO): On May 23rd, OKLO shares spiked 23% as volume soared 518% above the daily average after pro-nuclear energy legislation passed. Since then, shares have trended from $48 to $84.
2013 Meta Platforms (META - Free Report) : META, formerly Facebook, rose 30% on July 25th, 2013, after the company’s earnings release disclosed unexpected and robust mobile advertising revenue growth. Since then, shares have boomed from $34 to $755 today!
History shows that when married to a groundbreaking, fundamental catalyst, large price gaps are not only buyable but also lead to potentially life-changing returns.
Bottom Line
With its vertically integrated model, strategic Nvidia partnership, and the recently announced, game-changing contract with Microsoft, Nebius Group has positioned itself as a formidable leader in the AI industry.