The Trust Layer for Market Analysts

Nebius Group, an artificial intelligence company, is demonstrating robust financial performance. In the third quarter, overall revenue reached $146 million, marking a substantial 355% year-over-year increase and a 39% sequential growth. The annualized run rate revenue for the core business, as of September, was $551 million. The core infrastructure segment, which contributes approximately 90% of total revenue, saw a 400% year-over-year and 40% sequential increase. Management indicated that revenue growth was constrained solely by available capacity, highlighting an insatiable demand for their AI solutions. The adjusted EBITDA margin for the core infrastructure business expanded to nearly 19% quarter-over-quarter. To support aggressive growth plans through 2027, Nebius intends to utilize corporate debt, asset-backed financing, and equity. The company is actively raising asset-backed debt, leveraging the creditworthiness of its major customers, such as Microsoft ($17 billion deal) and Meta Platforms ($3 billion deal), to secure favorable terms. This strategy is expected to enable capital raising at a relatively lower cost. Based on a discounted cash flow valuation, Nebius Group's intrinsic value per share is estimated at $109.66, against a current market price of $85.57. Despite being identified as a high-risk investment, the potential reward is deemed sufficient to justify the risk, leading to a 'Buy' rating.