Nebius Group (NBIS 3.70%) spent 2025 growing its core artificial intelligence (AI) cloud infrastructure business. Investors took notice as the company announced two major deals with hyperscalers, which helped sell out the company's available data center capacity.
That led the stock to surge 202.2% for the year, according to data provided by S&P Global Market Intelligence.
Image source: Nebius Group.
Nebius is in the sweet spot
Nebius provided investors with lofty estimates for revenue growth throughout 2025. Even though the company reported sales of only $105 million in Q2, management raised guidance for investors to expect an annual revenue run rate of up to $1.1 billion by the end of 2025. That's an incredibly short time period for the company to essentially triple its revenue.
There was good reason for that optimism, however. Nebius offers cutting-edge cloud computing services tailored for AI tasks. The interest from a hyperscale cloud provider like Microsoft in Nebius' data center AI infrastructure was a significant signal for investors. The companies announced an agreement in September valued at up to $19.4 billion, exceeding Nebius' entire market capitalization at the time of the announcement. It demonstrates the significant demand for the AI infrastructure that Nebius provides.
Another deal with Meta Platforms was announced in November. Nebius is set to deliver AI infrastructure to Meta over five years, valued at approximately $3 billion. Those agreements help explain why Nebius now expects its annual revenue run rate to explode from about $1 billion to between $7 billion and $9 billion this year.
NASDAQ: NBIS
Key Data Points
Other levers for Nebius
Nebius' core business is AI cloud infrastructure, but it is also expanding with three related businesses: Toloka, which partners on AI data needs such as training and evaluation; a second business segment in educational technology; and Avride, a manufacturer of autonomous vehicles and delivery robots.
That gives investors optionality as those businesses also continue to grow. Avride, in particular, could have a meaningful amount of upside. However, even considering the potential future contributions from these other business segments, investors have already priced in a significant amount of growth for Nebius.
Management's transparency, specifying an annual revenue run rate of $8 billion at the midpoint of guidance by the end of 2026, is admirable. With the stock recently trading at just over three times that annual sales level, it doesn't seem overly expensive. However, Nebius needs to execute this year, and demand for AI cloud infrastructure must continue to grow for the company to achieve that level of revenue. Investors should remain aware that any speed bump along the way could significantly impact the stock.
