Nebius Group (NBIS +1.11%) has been one of the hottest artificial intelligence (AI) stocks on the market over the past year, rising an incredible 333% during this period, driven by phenomenal growth fueled by booming demand for dedicated AI data center capacity.
Nebius is a neocloud infrastructure provider that operates dedicated AI data centers powered by Nvidia's graphics processing units (GPUs). Customers can rent cloud capacity to build and run AI applications, access popular AI models, build and tune proprietary models, and perform other tasks, such as generating images and creating AI agents.
The full-stack nature of Nebius' cloud infrastructure platform makes it ideal for hyperscalers and AI companies to run AI workloads in the cloud. The good news for investors is that this AI stock is poised for further upside, even after surging impressively over the past year. Let's see why that's the case.
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Nebius' incredible growth should help it sustain its red-hot rally
Nebius's 12-month median price target of $150 would mean a 36% jump in its stock price from current levels. The interesting point to note is that analysts expect such impressive upside despite Nebius' high price-to-sales ratio of 45.
However, that expensive multiple is justified by a potential jump of over 6x in Nebius' top line in 2026 from last year's levels of $530 million. As the chart shows, Nebius' revenue is poised to multiply nicely.
Data by YCharts.
It is easy to see why Nebius is on track to clock exponential growth. The demand for dedicated AI data center infrastructure is exceeding supply, a trend expected to continue until the end of the decade, according to Goldman Sachs. Nebius is filling that gap by building new data centers. More importantly, recent developments indicate that Nebius is positioning itself for terrific long-term growth by investing aggressively in additional data center capacity.
The long-term picture points toward a bright future
Nebius management said it believes the company can increase its active data center power capacity to 800 megawatts (MW) to 1 gigawatt (GW) by the end of 2026, up from 170 MW last year. The company recently announced it has received approval to build an AI factory in Missouri with a potential capacity of up to 1.2 GW. This project alone could double Nebius' capacity compared to what it projects at the end of 2026.
NASDAQ: NBIS
Key Data Points
Additionally, investors should note that Nebius can deliver solid upside even if it doesn't trade at the significant premium that it commands right now. Assuming it trades at even 7 times sales at the end of 2028 (in line with the U.S. tech sector's average), its market cap could jump to $102 billion over the next three years. That points to a potential increase of almost 4x over its current market cap.
Of course, Nebius' expensive valuation exposes the stock to volatility. However, growth-oriented investors can consider buying it, as it can deliver market-beating returns over the long run and could become a multibagger.
