Nvidia (NVDA +1.41%), the world's largest producer of data center GPUs, is considered a bellwether of the booming artificial intelligence (AI) market. So when the top chipmaker invests in smaller AI companies, those stocks attract a lot more attention from retail investors.
One of those stocks is Nebius (NBIS -2.40%). On March 11, Nvidia disclosed a new $2 billion investment in the AI cloud infrastructure company. That's about 7% of its $28.3 billion market cap. Let's see why that stamp of approval could ignite an even stronger rally this year.
Image source: Getty Images.
What does Nebius do?
Nebius was once known as Yandex, which owned Russia's top search engine and various portals, apps, and cloud-based services. In 2022, the sanctions against Russia drove Yandex to halt trading of its U.S.-listed shares, divest all of its Russian assets, relocate to the Netherlands, and rebrand itself as Nebius -- a provider of cloud-based AI infrastructure services.
As Nebius, it installed AI-optimized servers in its data centers and provided that computing power to companies that don't want to install on-site servers. It also offered customized cloud-based AI services for the data training, edtech, automation, and robotics markets.
Nebius owns a single first-party data center in Finland, and it leases data centers in the U.S., France, the U.K., and Iceland. It aims to increase its total capacity from 1 GW this year to 5 GW by 2030, and Nvidia will support that expansion with collaborations on AI infrastructure, fleet management, inference, and AI factory design and support services. Nvidia will also grant Nebius early access to the newest version of its accelerating computing platform.
NASDAQ: NBIS
Key Data Points
Why could Nebius' stock soar higher?
The market's demand for Nebius' cloud-based AI infrastructure services is skyrocketing as more companies optimize their businesses with AI applications. It's already secured multi-billion-dollar deals with Microsoft (MSFT -0.04%) and Meta Platforms (META +0.40%), and other tech companies will likely follow that lead as the AI market expands and evolves.
Nebius' revenue soared 462% in 2024, and surged another 351% to $530 million in 2025. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also improved from negative $266 million in 2024 to negative $65 million in 2025.
From 2025 to 2027, analysts expect Nebius' revenue to surge nearly 18-fold to $9.4 billion. They also expect its adjusted EBITDA to turn positive this year and nearly quadruple to $5.4 billion in 2027. But with an enterprise value of $40.8 billion, it still doesn't seem expensive at 29 times this year's adjusted EBITDA. Therefore, Nvidia's confident investment in Nebius in this turbulent market suggests this AI cloud infrastructure stock has a bright future.
