It seems like most artificial intelligence (AI)-focused investors are turning to semiconductor players and hyperscalers as potential long-term opportunities. However, early-stage AI infrastructure companies may prove to be better long-term picks, since heavy, power-dense data center capacity is starting to bottleneck the AI market.
Nebius (NBIS +0.19%) is well-positioned to benefit from this supply shortage.
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AI-optimized capacity
Nebius rents AI-optimized data center capacity (including dense Nvidia GPU clusters, liquid-cooling solutions, high-power racks, and an enterprise-grade software stack) to large enterprises and AI start-ups to host their AI training and high-frequency inferencing workloads.
During its Q3 earnings call, CEO Arkady Volozh reported that demand for data center capacity is so strong, the company has sold out all available capacity and also presold new capacity. This supply-demand mismatch dramatically increases the company’s pricing power.
Nebius’ recent financial performance was stellar, with revenue soaring 355% year over year in Q3. The core infrastructure business achieved an adjusted EBITDA margin of 19%, despite the company’s heavy investments in expanding global data center capacity.
Nebius also entered into a $17.4 billion, five-year deal with Microsoft, which could expand to $19.4 billion, and another five-year $3 billion deal with Meta Platforms. These mega-contracts have further validated Nebius’ scale and strategy.
NASDAQ: NBIS
Key Data Points
Analysts expect Nebius’ business momentum to translate into rapid revenue growth. Revenues are estimated to jump from $554 million in 2025 to $3.2 billion in 2026 and to $5.8 billion in 2027. The company currently trades at 64.3 times sales, which is very rich.
Assuming that the company's price-to-sales multiple compresses to around 10 times, in line with the average PS multiple of 10.14 times of a data center real-estate investment trust (REIT) by 2027, the company’s market capitalization will be close to $58 billion. This is more than double the company’s current market capitalization of $22.1 billion, or about 162% higher.
Hence, with the stock down nearly 29% in the past month, this may be a good time to pick a small stake in this stock.
