Since last Friday, shares of the artificial intelligence (AI) data center company Nebius Group (NBIS +4.54%) had soared roughly 29%, as of 11:57 a.m. ET Thursday. The company successfully raised capital this week and received more positive sentiment from Wall Street.
Becoming a serious AI name
On Monday, Nebius announced that it had successfully raised $1 billion through two different tranches of unsecured convertible notes. Half is in the form of 2% convertible notes due 2029, while the other half is 3% convertible notes due 2031.
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Nebius' founder and CEO Arkady Volozh said in a statement:
Since our $700 million equity financing in December 2024, we have been scaling rapidly and expanding our global AI infrastructure footprint. The fresh capital we are raising now gives us more firepower to go faster, paving the way for increased revenue opportunities in 2026 and further accelerating us toward our medium-term target of mid-single-digit billions of dollars in revenue as a high-margin business, with potential upside.
NASDAQ: NBIS
Key Data Points
This morning, Arete Securities analyst Andrew Beale initiated coverage of Nebius with a buy rating and $84 price target, implying significant upside from current levels. Beale also said he prefers Nebius to another larger and similar company, CoreWeave, due to Nebius' more attractive valuation. While CoreWeave is more of a pure play on AI, Beale thinks Nebius' neo-cloud valuation is too low.
Still affordable in AI land
Nebius and CoreWeave are essentially in the business of running data centers for customers looking to build and run AI applications on, so if the AI industry continues to thrive, these two companies stand to benefit.
While I believe in AI's potential, I usually stay away from most AI stocks because of extremely high valuations. Nebius, however, actually came to the market last year at a very affordable valuation. The company had been delisted from the Nasdaq for close to three years due to being a Russian-owned company, although this is no longer the case.
After the stock's big run, the company trades at close to an $11 billion market cap, so it's more expensive than it once was. However, if management can hit its mid-single-digit billions revenue guidance over the next few years, the stock won't look expensive at today's value.
