Nebius (NBIS 3.70%) is a full-stack artificial intelligence (AI) infrastructure company. Through its cloud platform, it provides enterprises with on-demand access to high-end graphics processing units (GPUs) for training and inferencing AI models.
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Shares of the Amsterdam-based company have soared by more than 207% so far this year (as of the close of trading Dec. 30) and could rally further in the coming months. In fact, a $1,000 investment in this stock could grow to be worth $10,000 by 2031.
Growth drivers
Electricity availability remains one of the chief bottlenecks in the global AI infrastructure buildout. To address this constraint for itself, Nebius in November announced that it aims to secure 2.5 gigawatts of contracted power by the end of 2026, up from the 1 gigawatt it said it was aiming for as recently as August. The company has also already presold much of the capacity at its soon-to-be-opened data centers in the United Kingdom and Israel, which are being fitted with Nvidia's latest Blackwell GPUs.
NASDAQ: NBIS
Key Data Points
So far, Nebius has also demonstrated strong execution, quickly converting its new capacity into revenue. Third-quarter revenues soared by 355% year over year to $146 million as it fully sold its available capacity.
Nebius also enjoys exceptional demand visibility. The company has entered into a $3 billion, five-year deal to supply processing power to Meta Platforms and a $17.4 billion, five-year deal with Microsoft. Based on its outlook, the company is aiming for an annualized run rate of between $7 billion and $9 billion by the end of 2026.
Analysts forecast that Nebius' revenues will surge from an expected $555.9 million in 2025 to $27.1 billion in 2031. Currently, the company trades at a lofty valuation of nearly 64 times sales, but consider this. Suppose its top line follows its expected growth path and its P/S multiple gradually compresses to 8.5 in 2031 -- in line with the valuation of an average data center real estate investment trust (REIT). Under this reasonably plausible scenario, the company's market capitalization would be above $230 billion. That's more than 10 times its current market capitalization of $21.4 billion (as of Dec. 30), which would make Nebius a 10-bagger stock.
