To The Moon

$NEBIUS(NBIS)$

Artificial intelligence (AI) continues to reshape not just the technology sector but also financial markets. Every few months, a new player emerges from relative obscurity to become the next centerpiece of investor excitement. This time, the spotlight falls on Nebius (NASDAQ: NBIS), a hyperscale AI infrastructure company that has just stunned Wall Street.

Shares of NBIS soared an extraordinary 70% in a single trading session, closing at $108.58, after the company announced a multi-year $19.4 billion agreement with Microsoft (MSFT). According to NBIS’s SEC filing, Microsoft will purchase $17.4 billion worth of AI cloud services, with an additional $2 billion option running through 2031.

For a company of NBIS’s size, this deal is transformative. It validates its technology, locks in significant long-term revenue, and places it firmly on the map as a contender among the new generation of AI infrastructure specialists. But it also raises two major investor questions:

1. Has NBIS become “too expensive” after its explosive rally — like CoreWeave, which saw its valuation questioned after sky-high funding rounds?

2. Or is NBIS still at the beginning of a long-term growth story, particularly given its ties to Nvidia’s hardware ecosystem?

To answer these questions, we’ll examine the Microsoft deal, compare NBIS’s valuation to peers, explore the Nvidia ecosystem effect, and outline the risks and opportunities that investors should weigh.

Microsoft’s Expanding AI Appetite

Over the past three years, Microsoft has emerged as the primary corporate patron of the AI boom. Its partnership with OpenAI, integration of generative AI into the Microsoft 365 suite, and relentless expansion of Azure’s AI capabilities all demonstrate how central AI has become to its growth strategy.

The agreement with NBIS is a continuation of this strategy. It ensures Microsoft has access to additional AI infrastructure capacity at a time when demand for GPU-based compute is surging. Microsoft is effectively “locking in” capacity that can be used to support Azure customers, OpenAI training runs, and enterprise AI deployments.

For NBIS, the significance cannot be overstated:

• It guarantees billions in recurring revenue over multiple years.

• It validates NBIS as a credible Tier-1 provider, no longer a niche competitor.

• It deepens NBIS’s ecosystem ties, potentially opening the door to further partnerships.

This is exactly the kind of deal that can transform a promising but speculative company into a recognized leader.

The Valuation Debate: CoreWeave vs. NBIS

Whenever a hyperscaler surges on a massive AI deal, comparisons to CoreWeave are inevitable. CoreWeave, another Nvidia-aligned player, became one of the most talked-about private companies in 2023–2024. Valuations in funding rounds quickly exceeded $19 billion, despite limited profitability and narrow customer concentration.

NBIS is now being viewed through a similar lens. Following the surge, NBIS trades at a forward price-to-sales ratio of ~14x (based on 2026 revenue projections). That’s high by traditional standards, but still somewhat lower than CoreWeave’s rumored multiples of 18–20x.

The difference lies in execution risk:

• CoreWeave has raised vast sums but lacks long-term contracted revenues at NBIS’s scale.

• NBIS now has a single, dominant anchor customer in Microsoft, reducing revenue uncertainty.

However, this also introduces risk. Heavy dependence on one customer creates concentration risk. Should Microsoft shift strategy, NBIS could be left exposed.

Nvidia’s Ecosystem Effect

Why are companies like NBIS and CoreWeave drawing so much attention? The answer lies in Nvidia.

Nvidia has become the gatekeeper of the AI era, with its H100 and next-generation Blackwell GPUs forming the backbone of most large-scale AI training systems. Demand for these chips is so high that customers are willing to pay premiums and secure capacity years in advance.

NBIS’s strategy has been to build infrastructure deeply optimized around Nvidia’s GPUs. By doing so, it positions itself as a turnkey hyperscaler for enterprises and developers seeking AI compute capacity without having to build their own data centers.

For investors, this raises a fascinating question: Is simply following Nvidia’s ecosystem partners a winning strategy?

Evidence so far suggests yes. Consider:

• Super Micro Computer (SMCI): Server manufacturer with close Nvidia ties. Shares rose over 800% in two years.

• CoreWeave: Nvidia-aligned hyperscaler that drew billions in private funding.

• NBIS: Now up over 70% in a day on a single announcement.

When Nvidia succeeds, its partners succeed. It’s a reminder that ecosystems often generate the strongest investment returns.

Financial Profile: What’s Under the Hood?

While NBIS is still early in its public market life, a few financial realities are emerging:

1. Revenue Visibility – The Microsoft deal alone secures nearly $20 billion in forward revenues. For a company previously generating under $2 billion annually, this is an exponential step-change.

2. Capital Intensity – Building hyperscale AI infrastructure is enormously expensive. NBIS will likely need additional capital raises or debt issuance to meet demand. Investors must accept that free cash flow could remain pressured for years.

3. Profitability Path – If NBIS can achieve utilization efficiency and margin expansion, long-term operating margins could resemble cloud peers (20–30%). But in the short run, capex will outweigh profits.

This makes NBIS a classic high-growth, high-burn AI story: explosive top-line expansion with delayed profitability.

Competitive Landscape: The Race for AI Infrastructure

NBIS’s rise does not occur in isolation. It faces competition on multiple fronts:

• CoreWeave – Still the closest direct rival, with strong Nvidia ties.

• Lambda Labs – Focused on AI cloud but smaller scale.

• Hyperscale Incumbents – AWS, Google Cloud, and Microsoft itself remain the dominant players.

The challenge for NBIS will be to differentiate itself enough to carve out a durable niche. The Microsoft deal is a massive first step, but sustainable growth will require diversifying the customer base.

Risks Investors Should Weigh

Even amid the excitement, several key risks stand out:

1. Customer Concentration – Microsoft’s dominance in NBIS’s pipeline is both a strength and a vulnerability.

2. Capex and Debt Load – Maintaining competitive infrastructure could require ongoing billions in capital expenditures.

3. Competitive Intensity – Tech giants may decide to scale internally, limiting the addressable market for smaller hyperscalers.

4. Market Sentiment – AI stocks are prone to hype cycles. A slowdown in Nvidia’s growth or macro AI spending could hit NBIS disproportionately.

Verdict: A “CoreWeave 2.0” or Sustainable Growth Story?

At $108.58, NBIS has already rewarded early believers handsomely. But is there more upside?

The bullish case rests on three pillars:

• Locked-in Microsoft deal provides visibility unmatched by most peers.

• Deep Nvidia integration ensures NBIS rides the leading wave of GPU-driven AI growth.

• Scarcity of public AI infrastructure plays creates demand from institutional investors eager for exposure.

The bearish case argues that:

• The stock’s 70% surge prices in much of the good news.

• Heavy reliance on one customer magnifies execution risk.

• Capex intensity could suppress cash flow for years.

For long-term growth investors, NBIS remains a compelling story. But chasing the stock after such a rally carries risk. A prudent approach may be to wait for a consolidation phase, ideally around the $85–90 range, before adding exposure.

Key Takeaways

1. NBIS stock soared 70% after announcing a $19.4 billion multi-year deal with Microsoft.

2. The agreement secures revenue visibility and validates NBIS as a serious hyperscale AI contender.

3. Valuation is elevated, but still arguably cheaper than CoreWeave’s rumored multiples.

4. Nvidia’s ecosystem continues to produce winners, reinforcing the idea that backing Nvidia-linked plays can deliver outsized returns.

5. Risks remain high, particularly customer concentration and capital intensity, suggesting investors may want to wait for a pullback to the $85–90 entry zone.