Generally speaking, investors tend to follow the trail of "smart money." One of the most transparent ways to see where Wall Street is deploying capital is through quarterly 13F filings. These reports are often associated with hedge funds and money managers, but it's worth noting that large corporations also file them when they allocate capital to outside investments.
Take semiconductor darling Nvidia as a prime example. According to its latest 13F, the company holds equity positions across six stocks: CoreWeave, Arm Holdings, Applied Digital, WeRide, Recursion Pharmaceuticals, and Nebius Group (NBIS +4.53%).
If Nebius isn't already on your radar, it should be. Shares have surged 154% so far this year, far outpacing the gains across the S&P 500 and Nasdaq. And momentum may not be slowing -- Andrew Beale of Arete Research is calling for 20% upside, placing a price target of $84 on Nebius stock.
The combination of corporate backing from Nvidia, coupled with bullish analyst conviction, makes Nebius a tempting growth stock in an otherwise crowded, frothy artificial intelligence (AI) trade.
Let's unpack how Nebius fits into the AI ecosystem and explore why it's a compelling under-the-radar opportunity right now.
NASDAQ: NBIS
Key Data Points
The infrastructure chapter of the AI narrative is unfolding
Over the last few years, big tech has unleashed record sums of capital expenditures (capex) into AI platforms. From GPUs and servers to networking equipment, hyperscalers are accelerating their data center footprints at an unprecedented pace.
AMZN Capital Expenditures (TTM) data by YCharts
On the surface, rising infrastructure spend appears to benefit Nvidia and other chip businesses most. Yet record GPU demand has created a bottleneck across the tech landscape -- and this is precisely where Nebius enters the picture.
Unlike trillion-dollar hyperscalers, most companies developing AI applications lack the financial flexibility to build massive data centers or secure long-term GPU supply. Accessing the hardware needed to power advanced AI models has become a cost-prohibitive, logistically challenging issue.
Nebius solves these problems by operating as a neocloud platform -- providing businesses access to Nvidia GPU clusters through a cloud-based infrastructure.
This model essentially democratizes high-performance computing. Rather than pouring billions into data centers, companies can rent scalable GPU capacity from Nebius and accelerate their AI roadmap -- all at a fraction of the cost of buying GPUs directly from suppliers.
The value proposition is that Nebius bridges the gap between explosive demand for compute and the concentrated supply of infrastructure within big tech. These dynamics highlight why Nebius is emerging not just as a growth story, but also one positioned as a long-term structural play on the future of AI adoption.
More sophisticated workloads bolster Nebius's ecosystem
Outside of its core infrastructure business, Nebius also operates three subsidiaries: Avride, Toloka, and TripleTen.
Avride sits at the intersection of autonomous vehicles and delivery robotics -- sectors that stand to benefit enormously as AI shifts from reactive models to more sophisticated applications integrated with the physical world.
Toloka and TripleTen, meanwhile, focus more on the software side: specializing in AI data labeling, as well as providing educational services to the next generation of AI engineers.
As AI workloads move into more advanced applications across autonomous systems, robotics, and downstream software and services, Nebius is strategically positioned to participate across multiple growth vectors. This means its total addressable market (TAM) is far larger than it appears at first glance -- extending well beyond its cloud infrastructure-as-a-service business.
This diversified ecosystem is what makes Nebius so compelling. Much like Amazon's evolution from an e-commerce retailer into a leader in cloud computing, advertising, logistics, and entertainment, Nebius is building an AI-centric platform spanning hardware, software, and services. These parallels are what led me to describe Nebius as the Amazon of AI infrastructure in a prior article.
Image source: Getty Images.
Is Nebius stock a buy right now?
According to Nebius's second-quarter earnings report, management is guiding for up to a $1.1 billion annual recurring revenue (ARR) run rate by December. Given the company's market cap currently hovers around $16.7 billion, Nebius trades for approximately 15x forward sales guidance.
While the stock isn't dirt cheap, it's also not trading at unreasonable levels.
Considering the business is so uniquely positioned to capture AI-driven tailwinds across hardware and software, I still view Nebius as a compelling opportunity to buy and hold as further gains appear to be on the horizon.
With Nvidia's backing, accelerating ARR, and a diversified ecosystem, Nebius offers investors considerable runway and an under-the-radar opportunity alongside the ongoing AI infrastructure revolution.
