NVIDIA image of Quantum Cloud

If you have never heard of a company called Nebius Group N.V. (NASDA: NBIS), you probably are not alone. What you have definitely heard of is artificial intelligence. And you have definitely heard of NVIDIA Corporation (NASDAQ: NVDA). And perhaps you have heard of Yandex, but that will be later here. Nebius Group is an AI infrastructure player and it just secured an investment of $700 million from a group of investors which includes NVIDIA, Accel and Orbis Investments.

The big player in the Nebius investor group is of course NVIDIA participating on the oversubscribed equity financing. Nebius sold 33.3 million class A shares to the investment group at $21.00 per share. And now Netherlands-based Nebius expects an annual run rate of revenues by the end of 2025 to be $750 million to $1 billion, up from the $500 million floor previously issued. Nebius plans to expand its AI cloud computing infrastructure and it lists itself as a preferred cloud service provider in the NVIDIA Partner Network.

Most investors might think this makes Nebius Group an instant “tactical bull” stock. Having NVIDIA as an investor or stakeholder certainly should not hurt a company. The question is how much it really helps in the long-term. A recent picture of other public company stakes held by NVIDIA looks mixed, and the evidence over the long-term has not yet played out with a simple verdict.

So, where should investors go from here?

YANDEX TO NEBIUS

Arkady Volozh is the CEO of Nebius, and Nebius was previously known as Yandex — the company often referred to as “The Google of Russia.” Yandex was suspended in trading and then after an announcement to be delisted by NASDAQ the company appealed the determination on the basis that it was restructuring by getting rid of its Russian assets.

Nebius is now more focused on AI and recently launched a data center with Nvidia GPUs in Kansas City and is planning a second U.S. location on top of a data center facility in Finland. Its cloud computing platform is designed for the full machine learning lifecycle and Nebius has resumed trading under the new name and new model. In some ways this entire journey has been unprecedented with a long pause in trading (Feb-2022), divesting its Russian assets and then resuming business and stock trading under a new name.

A more detailed background of the history and commentary by Nebius CEO can be found on TechCrunch.

NVIDIA’S OTHER PUBLIC COMPANY INVESTMENTS

NVIDIA is no stranger to investing in companies. While some are public, the lion share of its investment ecosystem is made up of dozens of private companies. ARM Holdings (NASDAQ: ARMH) is NVIDIA’s largest investment, but here are some other public companies it has invested in.

Recursion Pharmaceuticals, Inc. (NASDAQ: RXRX) is a clinical stage biotech using machine learnings to bolster its drug discovery platform. NVIDIA invested $64 million and its BioHive-2 supercomputer is powered by NVIDIA’s hardware. Readouts on clinical data are not expected until well into 2025 and its stock is actually down 20% YTD.

Serve Robotics (NASDAQ: SERV) had more than $13 million invested by NVIDIA and this is an autonomous food delivery machine provider that can replace human deliveries in short areas. Its shares surged after the NVIDIA investment and have since mellowed. News that it was acquiring Chipotle’s “Autocado” partner Vebu has put it more on the map as a full-stack automation and robotics solution provider for restaurants.

SoundHound AI (NASDAQ: SOUN) is another NVIDIA investment that is focused on being a voice-AI provider for restaurant chains and other businesses. SoundHound’s shares surged early in 2024, and after settling down for most of the year its stock has surged 50% since early in November. Its conversational Amelia AI platform was recently touted as a key productivity booster in medical and insurance calls.

Applied Digital Corporation (NASDAQ: APLD) was a newer stake taken by NVIDIA as the digital infrastructure solutions provider of next generation data centers and cloud infrastructure was listed as a 7.2 million share stake that was disclosed in mid-November’s 13F filing. Its stock ip 52% YTD and its shares have tripled since bottoming out close to $3.00 in early September.

HOW NEBIUS LOOKS NOW

Nebius was relaunched as a public company without an initial public offering and without a typical roadshow and the stock was relaunched on October 18, 2024 at a $20.00 closing price on October 21. Its stock was not listed for more than two years as it was restructuring. The stock has no analyst coverage that has been seen since its share relaunch in October.

A one-day gain of 18% to $26.00 is an impressive gain. Its shares had traded as high as $27.90 and the 10.5 million shares trading hands nearing the noon hour was already almost double a full day’s average trading volume.

DISCLAIMER

Tactical Bulls has no price target and has no formal rating on Nebius. This flew under the radar until the NVIDIA stake and its return to trading as a public company remains an unprecedented effort due to its strong business ties to Russia in the past. Nothing in this report is intended to be investment advice and this is not a recommendation to buy or sell any of the companies named. All investments come with risks of losses and any decision to buy or sell should be made along with the help of a financial advisor.