Consider buying Nebius (NBIS), an undervalued AI infrastructure company whose recent stock drop presents a significant buying opportunity. The company's growth is validated by massive contracts, including a $3 billion deal with Meta (META) and a $19 billion deal with Microsoft (MSFT). Management forecasts a potential 10x to 16x revenue increase by the end of 2026, driven by explosive demand for AI compute. The current stock price may not reflect the hidden value of its significant stakes in private tech companies ClickHouse and AVRide, which could be unlocked through future IPOs. With the stock trading at a low 4 times forward sales, the current valuation is seen as an attractive entry point for this hyper-growth story.

Nebius (NBIS)

• The speaker presents a very bullish case for Nebius, calling it a "hyper growth gem" that is currently "undervalued" and being "mistreated" by the market.
• The stock was down 24% at the time of the podcast, which the speaker attributes to a market-wide liquidity issue affecting small-cap stocks, not a fundamental problem with the company itself.
• Major AI Contracts:
  • Nebius recently announced a $3 billion deal with Meta (META).
  • This follows a previously announced $19 billion deal with Microsoft (MSFT).
  • The ability to secure these large deals is partly credited to the CEO's connections as the former CEO of Yandex.
• Explosive Growth Projections:
  • Management forecasts an annualized revenue run rate (ARR) of $5 billion to $9 billion by the end of 2026.
  • This is a potential 10x to 16x increase from the current ARR of $551 million.
  • The company has a strong history of growth, with past performance at 350% year-over-year.
• Valuation & Financials:
  • The speaker believes the stock is "so, so cheap," trading at only 4 times forward sales.
  • The company has a stable adjusted EBITDA margin of 19%.
• "Hidden" Assets Not Priced In: The speaker argues that the market is ignoring the value of several key assets owned by Nebius:
  • AVRide Stake: Ownership of the self-driving technology company AVRide, which has received significant investment from Uber (UBER). This is seen as a valuable asset that could be spun off in the future.
  • ClickHouse Stake: A 28% ownership in ClickHouse, a private data analytics company that competes with Snowflake (SNOW). The speaker speculates ClickHouse could IPO at a valuation as high as $20 billion, making Nebius's stake extremely valuable.
  • Power Infrastructure: The company is on track to secure 2.5 gigawatts of power, a critical and valuable asset for AI data centers. This capacity is comparable to peers like IREN and CoreWeave, which the speaker suggests have higher valuations.

Takeaways

• The core investment thesis is that NBIS is severely undervalued relative to its massive, near-term revenue growth potential, which is validated by major contracts with tech giants.
• The recent significant drop in the stock price is presented as a potential buying opportunity caused by temporary market-wide factors, not company-specific weakness.
• Investors should consider the "sum-of-the-parts" value. The current stock price may not reflect the full potential value of its stakes in AVRide and ClickHouse, or its significant power infrastructure. A future IPO or spin-off of these assets could act as a major catalyst for the stock.

Meta (META), Microsoft (MSFT), and AMD (AMD)

• Meta and Microsoft are mentioned as major customers for Nebius, signing massive deals worth $3 billion and $19 billion, respectively, for its AI compute services.
• AMD is mentioned as an example of a company confirming that overall demand in the AI sector is "through the roof," which contrasts with the poor recent performance of some AI-related stocks.

Takeaways

• The large-scale commitments from tech giants like Meta and Microsoft serve as powerful validation for Nebius's technology and business model.
• The commentary on AMD reinforces the broader bullish investment theme for the entire AI sector, suggesting that the demand environment for companies providing AI infrastructure and services is extremely strong.

Snowflake (SNOW), ClickHouse, and AVRide

• Nebius owns a 28% stake in ClickHouse, a private competitor to the publicly traded data company Snowflake (SNOW), which has a market cap of $92 billion.
• The speaker speculates that ClickHouse could be worth tens of billions of dollars if it were to have an Initial Public Offering (IPO).
• Nebius also owns AVRide, a self-driving technology company that has received hundreds of millions in investment from Uber.

Takeaways

• These assets represent potential "hidden value" within Nebius that the market may be overlooking in its current valuation.
• A future IPO of ClickHouse or a spin-off of AVRide could unlock significant value for NBIS shareholders. The high valuation of Snowflake is used as a benchmark to illustrate the potential upside for Nebius's stake in ClickHouse.

IREN and CoreWeave

• These companies are mentioned as peers to Nebius in the data center and AI infrastructure space.
• Nebius is on track to have 2.5 gigawatts of power capacity, putting it in the same league as these competitors.

Takeaways

• This comparison is used to strengthen the argument that NBIS is undervalued. The speaker implies that peers like IREN and CoreWeave may have higher valuations despite Nebius having comparable infrastructure and arguably better execution on securing major contracts.