Dutch Nebius is the Phoenix of the AI cloud

karhulalainen · February 16, 2025, 4:05pm

(Avride is Nebius’s brand for autonomous driving)

I find Nebius’s story very interesting, which is why I started this thread. Here are a few things that piqued my interest in following the company. Yandex was founded on September 23, 1997, while Google was founded a year after Yandex, on September 4, 1998. Arkady Volozh is a well-known technology entrepreneur, best known as the founder and former CEO of Yandex, “Russia’s Google”. Now he is the CEO of Nebius and, through his company, holds 59% of the voting power in Nebius Group. And his share ownership is 15%. So, the management’s “CV” and share ownership are in order.

Arkady Volozh has publicly condemned the actions of his home country’s political leadership. Although Nebius can be considered a successor to Yandex, Nebius has severed all financial and legal ties to the Russian Yandex. Everyone should do their own analysis on this matter. Unfortunately, according to Nordea, Nebius, as a company with Russian origins, is still subject to sanctions, and Nordea does not allow trading in the company!

There are two reasons why Nebius is interesting. As I mentioned earlier, the CEO’s CV (founded “Russia’s Google”) and his share ownership in the company are solid. Another equally significant point is that after the start of the war in Ukraine, a large part of Yandex’s staff moved out of their home country. After various stages, the CEO of the originally Moscow-based Yandex company and about a thousand top professionals from Yandex are now working in Amsterdam, at Nebius Group. What happened here is that the “brains” of the Russian Yandex moved to Nebius, while Yandex’s capital and IPRs were transferred to Russia; they are not with Nebius.

Volozh is a strong leader for his people, and his staff trusts him. Nebius’s 1,000-person team has therefore already once built a service business comparable to Google. Now that team has started from scratch again. From Volozh’s speeches, I’ve heard that they still have top experts who have worked for Yandex for decades. Nebius is thus a high-caliber team of professionals starting from scratch to do what they do best.

Nebius is still small, but through venture capitalists, it has gotten on its feet and is growing rapidly. Their core service is to provide AI computing capacity to independent AI developers. This, in my opinion, holds the biggest risk. American mega-firms certainly get Nvidia GPUs at more favorable prices than Nebius. This means tech giants can inherently offer capacity cheaper than Nebius. But I opened this thread precisely so that we could collectively understand how and how far Volozh intends to go with Nebius.

Financial figures can be examined in more detail online or from the link I shared below. At the end of 2024, the company had an annual turnover of approximately 200 million, and by the end of 2025, the company predicts an annual turnover level of one billion. The company predicts that adj. EBITDA will turn positive during 2025.

Nebius has a data center in Mäntsälä (with a lot of Nvidia inside), and new server centers are also emerging in Paris and Kansas City. Among the company’s clients is the French Mistral.ai. Furthermore, the company possesses expertise related to AI development and training. There is also expertise related to autonomous driving. A good set of information to get acquainted with the company is here:
Nebius Group Investor Presentation

It will be interesting to follow how the company fares. It is quite unprecedented for a team of a thousand professionals to physically change location, surrender capital and IPRs, but take their expertise with them to restart what they do best (i.e., AI cloud setup, development, and innovations), all done even better and from a clean slate.

Nebius Group

kettunen · February 16, 2025, 5:23pm

The expansion of the Mäntsälä data center is already known, but Tekova is apparently implementing the construction part

Tekova to build an AI data center expansion in Mäntsälä, contract value approx. €17.2 M

Tekova Plc, company announcement February 16, 2025 at 6:45 p.m.

Tekova Plc and Nebius DC Oy have signed a contract for the construction of the new phase of Nebius’s data center to be implemented in Mäntsälä. The contract value is approximately €17.2 M (VAT 0%) and the project size is approximately 20,000 m2.

More extensively about the project there. A large part of Mäntsälä’s district heating already comes from the data center, and in the future, an even more significant part.

Kille100 · February 16, 2025, 6:09pm

Great that this company also gets its own thread.
Nebius’s strategic partner is actually Nvidia, which invested 700 million in the company last year with an investor group, possibly the largest investment Nvidia has ever made in another company. In addition, they directly purchased 1.2 million shares (visible on Nvidia’s 13F form). Due to this purchase, Nebius’s stock rose on Friday (Feb 14) when the 13F form was released. Because of this partnership, Nebius will likely get processors at a reasonable price and faster than anyone else.
Blackwell processors will arrive at the Mäntsälä data center in Q1. The Mäntsälä data center is (according to the company’s own presentation) already the 6th largest in Europe and the 15th largest in the world.
The company aims to increase its current 20,000 processors to 240,000 processors by 2028. The company estimates it will generate 4 billion in gross profit annually by then.
The company is in a league of its own in terms of competitiveness, as, like SMCI, it designs its own servers, assembles them, performs hardware updates, and even develops its own software. They have 350 experts doing this. The CEO claimed in a television interview that by doing this themselves, they get servers 50% cheaper than by buying commercially. I don’t know if such a large discount can be true. The company can modify servers quickly.

If a fast-growing and profitable company is estimated to have a trailing P/E of 40, then the company’s value would be 160 billion in 2028.

The company estimates it will become Ebita profitable already this year (2025), which I find astonishing, as it usually takes many years for data center companies (like Alibaba or Amazon) to make a capital-intensive industry profitable, but perhaps the reason is precisely that they do everything vertically themselves.
Nvidia is very interested in autonomous driving, as I understand they are also designing it themselves. Additionally, it was revealed that in addition to Nebius, they purchased shares in WeRide (WRD), which already operates in 30 cities in China.
Nebius’s partner is the Uber taxi service and Uber Eats. Uber Eats already operates in Dallas, USA, with 200 robots in public spaces and, if I recall correctly, also in many closed university campuses in the USA.

karhulalainen · February 16, 2025, 6:20pm

I assume that Nebius’s competitive advantage is its skilled in-house personnel. They have kept their Yandex personnel employed and as a unified team throughout the transition period. And if it’s done in-house, the cost advantage is, as a rule of thumb, that 50%; I agree with the CEO.

Kille100 · February 17, 2025, 4:46pm

The CEO states modestly. (copied from Stocktwits)

$NBIS “Most of the computing capacity that we install is already pre-booked and sold. We hope to become profitable in less than a year because the industry’s demand for resources is huge: Whatever we install, the market buys immediately - and we really build a lot. Outside of the big U.S. tech companies, Nebius has one of the biggest teams working on AI cloud systems.” Arkady, CEO, Nebius

ademon · February 17, 2025, 5:38pm

Unfortunately, according to Nordea, Nebius, as a company with Russian background, is still subject to sanctions, and Nordea does not allow trading with the company!

What’s the sense in this? Such statements from Nordea are indeed peculiar, as all other banks seem to allow trading in the stock. Bringing up the entire Russian connection is quite splitting hairs, when the company has actively demonstrated its efforts to completely detach from Russia. Furthermore, Nebius continuously invests in Finland in the form of the Mäntsälä data center!

Hopefully, Nordea will come to its senses and allow trading as soon as possible

Makko · February 17, 2025, 8:18pm

I saw a BTD video a while ago, but I ruled it out because of the Russia connection. But it’s good that someone has been open and investigated things. I’ll probably return to the thread with my own DD.

kettunen · February 18, 2025, 8:00am

https://x.com/mvcinvesting/status/1877781495651127531

M.V. Cunha has produced comprehensive content on HIMS, among other things. Nebius was also featured even before it started its last upward leg. Should have just had chips in the account and fewer prejudices about Yandex’s history

The whole story bundled into an easier-to-read format:
https://threadreaderapp.com/thread/1877781495651127531.html

Makko · February 19, 2025, 4:21am

Here are my thoughts after analyzing the company:

IR presentation full of TAM (Total Addressable Market) hype
The business model is not very lean and will require significant personnel and hardware investments in the future
Cost of revenue is rising almost at the same pace as revenue
And I found it difficult to see that positive EBITDA target being met, but it might not look that way with backward-looking figures, and management certainly has better data than I do
Competitive advantage: gets hardware from Nvidia as the first “European” company, but is not the cheapest or most environmentally friendly. Who wants to buy those services with that product mix?
Competitive advantage: is a relatively energy-efficient operator
Risks: in short, the market is very young
relative to that revenue, the valuation is quite steep, although the percentage growth in revenue is also strong
I noticed that the CEO had made PR efforts to get rid of the stigma, which is very understandable in many ways, but I cannot yet say yes or no to the management’s Russia connections. So, for now, it is a risk.
side businesses are small-scale and may not scale.
Avgo requires an additional $150 million in funding right off the bat.
I’m not very convinced by that customer acquisition presentation.
The Mäntsälä data server is a geopolitical risk for many investors living in Finland

DCF is highly speculative, and this is either a -95% stock or +1000% (by 2028). Too speculative for my taste. So, not a no-brainer investment, but rather outright shocking gambling.

Kille100 · February 19, 2025, 6:20am

It’s good to get critical thinking for this young company; it helps to better form an image of the company’s opportunities/risks. In a couple of places, however, my own thoughts are slightly different.

Competitive advantage: gets hardware from Nvidia as the first “European” company, but is not the cheapest or most environmentally friendly. Who wants to buy those services with that product mix?

I assume it is precisely the cheapest and most environmentally friendly: It builds its own servers, and Nvidia is a partner on some level, so it gets the most expensive component of the servers, i.e., the processor, at a “special partner” price. The Mäntsälä data center is advertised as Ecological precisely because its waste heat now heats 2500 homes and more after the expansion. I don’t know, however, how the electricity is produced.

Mäntsälä’s data server is a geopolitical risk for many investors living in Finland
I also see the location as a risk, but above all as an opportunity; in a direct war, it would probably be at the top of the list of targets that the Russians would destroy, and in hybrid warfare, they would cut data cables in the Gulf of Finland. But if peace comes to Ukraine and sanctions are lifted, then:
Mäntsälä - St. Petersburg 384 km
Mäntsälä - Oulu 550 km

Mäntsälä is well positioned to provide AI computing to the Russian side; employees know Russian culture, the business world, and the language, so I consider this an advantage compared to other European and American competitors.

Chuckecheese · February 19, 2025, 6:25am

I personally don’t believe that even if the war in Ukraine ended, sanctions would be lifted very quickly. The US is already increasingly restricting hardware deliveries to China so that China doesn’t get ahead in the AI race, and I don’t believe in any way that the US or Europe wants to give Russia opportunities to develop AI capabilities. I wouldn’t count much on this for revenue. I at least strongly hope that the sanctions are maintained and Russia is kept as weak as possible so that it doesn’t constantly attack its neighbors at regular intervals.

kettunen · February 20, 2025, 12:41pm

Here’s the Q4 report

20250220 Nebius Group announces 4Q and FY 2024 financial results.pdf (282.8 KB)

And basic information and comments

Amsterdam, February 20, 2025 – Nebius Group N.V. (“Nebius Group”, the “Group” or the “Company”; NASDAQ: NBIS),(1) a leading AI infrastructure company, today announced its unaudited financial results for the fourth quarter and full year ended December 31, 2024.

In Q4 2024, the Group’s revenue of $37.9 million increased 466% year over year, driven primarily by the core AI infrastructure business, which grew 602% year over year. Adjusted EBITDA loss in Q4 2024 was $75.5 million and net loss from continuing operations was $136.6 million.

For the full year 2024, the Group’s revenue of $117.5 million increased 462% year-over-year. Cash and cash equivalents as of December 31, 2024, stood at $2,449.6 million on a consolidated basis. Full year 2024 adjusted EBITDA loss was $266.4 million and net loss from continuing operations was $396.9 million.

Arkady Volozh, founder and CEO of Nebius Group, said:

“The fourth quarter was extremely eventful for Nebius. Our shares resumed trading on Nasdaq in October, and we went on to raise $700 million in December in an over-subscribed capital raise from top-tier partners including Nvidia, Accel and Orbis.

“We made rapid progress in expanding our AI infrastructure footprint, announcing our first new GPU cluster deployment in the U.S. and adding capacity in Europe. On the software side, we launched our new AI-native cloud platform, built from the ground up, and our inference platform, AI Studio.

“In Q4 we also focused on building out our sales function, and we are now seeing the results. More clients are coming onto the platform, and our more diversified customer base is already contributing to strong growth in annualized run-rate revenue (ARR)(2). Based on contracts already in place, March ARR will be at least $220 million, and we have additional potential deals in the pipeline.

“Given this momentum, as well as the anticipated impact of additional data center capacity and Blackwell GPUs coming on-stream later this year, I am pleased to confirm that our projected December 2025 ARR of $750 million to $1 billion is well within reach.”

Edit: some numbers a bit open

EV $10B
Cash $2.5B
Annual revenue $220M
Cash burned now $417M / Q4
and $808M / 2024

The subsidiaries are quite interesting too, but not yet in the revenue-generating phase.
The growth figures are huge, but it’s starting small again, so they have to be.

Even if we reach that $750M - $1B annual revenue, we’re still at pretty high multiples

karhulalainen · February 20, 2025, 8:49pm

CEO Arkady Volozh and his team held their second Nebius investor call. It was, by the way, a bit different than I expected. Arkady reminded me of a sawmill entrepreneur from Viitasaari or someone similar who walks their own path. Arkady practically yawned… “uuuh…was I supposed to say something now?” Some of the team also continued in the same vein. I say this on a positive note; it felt like the call was a chore, and the crew just wanted to get to specifying their new data center located in Iceland.

Their talk definitely exuded a kind of “garage guy” vibe. I think they said this, as I wrap up the investor call: “We are doers, and by the end of the year, we’ll see proper results.”
I don’t stress about the numbers myself, as the company is just at its very beginning, and proper results will only start to show after 2025. Totally cool!

Sijoittaja-alokas · February 23, 2025, 12:56pm

Here’s a tweet thread about the company, Finland mentioned, and you probably know why:

3/ Custom hardware allows it to reduce costs drastically. Its giant data center in Finland uses external ambient air to reduce heat in data rooms. This allowed them to design their hardware in a way that operates at higher temperatures than the industry standard. This obviates the need for sub-cooling and reduced costs drastically, boosting the efficiency.

Well… there was a lot of other stuff in the tweet thread, which is why I posted it here. Of course, it’s mostly familiar information for those who have followed the thread and the company more closely, but I think it’s a good summary of the company.

https://x.com/thexcapitalist/status/1892593998297985409

Rest of the tweet thread

Sijoittaja-alokas · March 5, 2025, 4:53pm

Nebius is expanding in the United States by building a new data center in New Jersey with a potential capacity of up to 300 MW. The first phase will be completed in summer 2025, and capacity will also be increased in Kansas City and Iceland, where the new center will utilize geothermal energy.

The company aims for rapid growth and has already secured over 400 MW of additional capacity. These expansions support the company’s goal to increase capacity in both the United States and Europe this year.

https://x.com/mvcinvesting/status/1897264072128684433

Then, the subsidiary Avride announced a strategic alliance with Hyundai.

https://x.com/mvcinvesting/status/1897318264155312522

EDIT:

I’ll add this here as well.

https://x.com/BourbonCap/status/1897295352316998081

Sijoittaja-alokas · March 9, 2025, 3:56pm

Here’s a tweet about Nebius, and it has a link to a longer article about the company, which is worth reading. The tweet gives a taste of the article’s content. I put the tweet’s link below the tweet.

It’s hard to summarize such a long story, and I didn’t grasp everything, but it talks about how the company has grown rapidly and focuses on AI infrastructure, and it also reminds us how it offers a specialized cloud service with customized solutions for AI, using the company’s own servers and natural cooling to save costs.

The article mentions that the company is currently in a significant growth phase, and its goals are ambitious, at least concerning data centers and GPU capacity, aiming to triple them this year.

The text mentions that the markets are highly competitive and also that the company has great potential, especially due to its specialized technology. And it further reminds us how strong the company’s financial situation is and how its growth has been rapid, which attracts institutional investors.

https://x.com/thexcapitalist/status/1898729920244695283

Link to the actual article:

Kille100 · March 12, 2025, 11:32am

CEO’s interview
It feels odd that with all this know-how the company has and its potential in various industries, the markets value it at only 4 billion (when cash and debts are subtracted from the market cap).
Of course, the cash burns quickly at the current growth rate.

Sijoittaja-alokas · March 14, 2025, 4:56pm

This is a really long tweet thread. It’s worth reading at your leisure, a large part of it is probably not very “unfamiliar” to most, but everyone will probably get something new out of this thread.

https://x.com/HyperTechInvest/status/1900441989138501899

Reserve at least 0.5 hours for the rest of the tweet thread

Sijoittaja-alokas · March 14, 2025, 9:29pm

I’ll post a couple more tweets here separately.

Verne, the Nordic region’s leading provider of green energy HPC data centers, has signed a 10-megawatt agreement with AI infrastructure company Nebius.

The agreement secures GPU capacity for Nebius, while major players like AWS and Azure are still struggling with supply difficulties. As a long-term strategy, the company is preparing for the expansion of AI models in 2025–2027. Additionally, sustainable computing capacity can make Nebius an attractive option for corporate clients who prioritize green technology.

https://x.com/mvcinvesting/status/1900598188186165280

https://x.com/yianisz/status/1900652833097052408

Sijoittaja-alokas · March 18, 2025, 11:16pm

Nebius has announced it will become an early adopter of NVIDIA’s Blackwell Ultra AI Factory platform.

The platform offers the world’s most advanced computing power to AI developers. Nebius will provide its customers access to NVIDIA’s GB300 NVL72 instances by the end of 2025.

https://x.com/mvcinvesting/status/1902103663750914215