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Why Nebius Group Rocketed 62% Higher in May
NBISNebius Group N.V.(NBIS) The Motley Fool· The Motley Fool·2025-06-07 19:00

Core Insights - Nebius Group's shares surged 61.7% in May, reflecting strong market interest and performance [1] - The company, formerly known as Yandex, rebranded and shifted focus to AI following the divestment of its Russian assets [1][2] - Nebius reported a remarkable revenue growth of 385% to 55.3millioninQ12025,withannualizedrecurringrevenue(ARR)increasingby68455.3 million in Q1 2025, with annualized recurring revenue (ARR) increasing by 684% to 249 million [4] Financial Performance - Nebius' adjusted net losses per share increased by only 19%, indicating improved cost management despite hypergrowth [4] - The company's total gross, depreciation, and operating costs grew by 96%, significantly lower than revenue growth [4] - The strong financial results coincided with a broader recovery in AI tech stocks, particularly after the U.S.-China tariff rollback [5] Strategic Developments - Nebius made a strategic majority investment in Toloka, an AI data solutions start-up, enhancing its capabilities in synthetic data generation [6] - The company expanded its data center presence from one to five locations across Europe, the U.S., and the Middle East within three quarters [3] - Nebius is positioned to benefit from Nvidia reference design systems, which may support continued growth [8] Market Position - Nebius' market capitalization reached 11.4billion,reflectingavaluationof45timesitscurrentARR,indicatinghighinvestorexpectationsforfuturegrowth[9]AreteResearchinitiatedcoverageonNebiuswithapricetargetof11.4 billion, reflecting a valuation of 45 times its current ARR, indicating high investor expectations for future growth [9] - Arete Research initiated coverage on Nebius with a price target of 84, suggesting confidence in the company's growth trajectory [8]