Is This AI Stock Growing 10x the Most Undervalued AI Stock (No, It’s Not Nvidia)?

To anyone with a pulse, the artificial intelligence (AI) sector is booming, with companies racing to capitalize on the demand for advanced computing infrastructure. One of the best opportunities, though, may be Nebius Group (NASDAQ:NBIS), which has emerged as a compelling player and prompting speculation about whether it could be the most undervalued AI stock with the potential for explosive growth. 

Nebius’ second-quarter earnings report highlighted its potential with CEO Arkady Volozh projecting an annualized run rate (ARR) for revenue of up to $1.1 billion this year — a dramatic ramping up of growth from the $117.5 million it generated in 2024. 

While NBIS is gaining attention for its role in powering the AI revolution, does it truly offer 10x growth potential, and is it the best undervalued opportunity in the AI space?

Building the Backbone of AI

Nebius Group, formerly Yandex, is a Netherlands-based technology company focused on constructing full-stack infrastructure for AI. Unlike Nvidia (NASDAQ:NVDA), which dominates AI chip production, Nebius specializes in large-scale GPU clusters (using Nvidia’s advanced GPUs), cloud platforms, and developer tools, positioning itself as a critical enabler of AI innovation. 

Headquartered in Amsterdam and listed on Nasdaq, Nebius operates globally, serving startups, research institutes, enterprises, and national AI programs across sectors like healthcare, robotics, and finance. Its vertically integrated cloud platform combines hyperscaler flexibility with supercomputer power, making it a unique player in the AI infrastructure market.

The company’s rebranding from Yandex to Nebius a year ago reflects its pivot toward AI infrastructure, leveraging decades of expertise in machine learning and technology. Nebius also operates Toloka, a data platform for generative AI development; TripleTen, an edtech platform for tech reskilling; and Avride, which focuses on autonomous driving technology. This diversified portfolio strengthens its position in the AI ecosystem.

A Revenue Rocket Ride

Nebius Group showcased its remarkable financial progress during its Q2 earnings call. The company reported a 625% year-over-year revenue increase to $105.1 million, driven by surging demand for its AI cloud services. It could have done more, but there was a shortage of Nvidia Blackwell chips and Nebius chose to wait for their debut, which are now hitting the market en masse.

More strikingly, Nebius raised its full-year 2025 ARR guidance to between $900 million and $1.1 billion from its previous forecast of $700 million to $1 billion, signaling robust adoption and growth momentum. 

This projection underscores the company’s ability to scale rapidly as AI adoption accelerates globally.

Despite a widened Q2 loss of $91.5 million, attributed to heavy investments in data centers and GPU clusters, Nebius’s revenue growth reflects its strategic focus on capturing market share in the AI infrastructure space. 

The company’s stock surged post-earnings, with a year-to-date return of 158%, far outpacing the S&P 500. Investors view Nebius as having massive potential compared to competitors like CoreWeave (NASDAQ:CRWV).

Competitive Landscape and Valuation

Nebius operates in a competitive field alongside players like CoreWeave and Applied Digital (NASDAQ:APLD). However, its valuation appears attractive, with a price-to-sales ratio of 68 and a market cap of $17 billion. Despite a far greater P/S than CRWV, its tremendous growth forecast suggests NBIS actually trades at a discount to it. This fuels speculation about its undervaluation. Analysts project a one-year target price of $89 per share, implying further upside from its current price of around $71 per share.

Nebius’ global footprint, with hubs in Europe, North America, and the Middle East, and its partnerships with AI innovators — Nvidia is an investor — position it to benefit from the projected $1 trillion AI market by 2030. 

However, risks remain, including the need for high capital expenditures, which could indicate continuing profitability challenges.

Key Takeaway

Nebius Group’s triple-digit revenue growth and $1.1 billion ARR guidance highlight its potential as a high-growth AI infrastructure stock. Its diversified offerings and global presence make it a strong contender in the AI ecosystem, and its valuation suggests it may indeed be undervalued relative to peers like CoreWeave. 

However, the 10x growth narrative requires sustained execution and profitability improvements. It’s burning through cash and will need to make profits or face potential cash raise requirements within two years.

NBIS stock is not for everyone, but for investors with a high risk tolerance, Nebius Group is an appealing bet on the rapidly growing AI infrastructure market and its position as a leader in the space.

The post Is This AI Stock Growing 10x the Most Undervalued AI Stock (No, It’s Not Nvidia)? appeared first on 24/7 Wall St..