Nebius (NBIS) is rapidly emerging as a compelling investment in the AI infrastructure sector, drawing increased attention despite its limited history as a public company. As of August 29th, the company’s shares were trading at $68.32, with a trailing P/E of 75.96 and a forward P/E of 68.49.
The company’s performance has been explosive, with revenues surging 625% year-over-year to $105.1 million in the second quarter. This puts its current run-rate revenue at $430 million, a growth pace triple that of competitor Coreweave. The stock’s valuation is seen by some as pricing in conservative growth, suggesting substantial upside if management’s projections are met.
Nebius’s business model is designed around a virtuous cycle: superior infrastructure performance attracts customers and drives revenue, which in turn supports margin expansion and further investment. However, this growth is capital-intensive. Operating profit and free cash flow are currently strained by significant GPU-related capital expenditures, which amounted to $510 million in the second quarter alone.
Despite the heavy spending, management remains highly confident. The company has raised its annual recurring revenue (ARR) guidance to between $900 million and $1.1 billion by year-end and plans to expand its capacity to 220 MW this year, with a target of over 1 GW by 2026. This optimism is supported by major enterprise client wins, including Shopify, Prosus, and Cloudflare, alongside strong traction with AI-native startups.
This execution has rewarded early investors; the stock has appreciated approximately 224% since one bullish analysis in April highlighted its potential. The core investment thesis rests on the company’s long-term scalability. Still, risks remain, including significant cash burn and competitive threats from established hyperscalers. Reflecting a degree of institutional caution, the number of hedge fund portfolios holding NBIS declined from 66 to 51 in the most recent quarter.
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