Here is Why it can Make 3x in the Next 2 Years?
1/ $NEBIUS(NBIS)$ is my highest conviction stock for the next 5 years.
Revenue is growing triple digits, and they are looking to quadruple the capacity by the end of next year.
It's just starting off.
Here is why it can make 3x in the next 2 years: 🧵
2/ What does NBIS do?
It's a full-stack AI infrastructure provider.
What the hell does this mean?
They build and operate their own data centers with their custom hardware.
On top of this capacity, they have built a cloud business specifically for AI/ML workloads.
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3/ It has data centers in Europe and the US.
Currently, the majority of the capacity comes from data centers in France and Finland.
Yet, they are rapidly expanding in the US and have contracted another data center in the UK.
So, what sets their data centers apart?
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4/ It has some of the most energy-efficient data centers in the world.
Its flagship data center in Finland uses natural air for cooling, reducing the need for sub-cooling and allowing them to design their custom servers.
This drastically cuts costs.
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5/ Their custom servers boost performance.
Their servers were built on InfiniBand networking designed specifically to work with Nvidia GPUs.
This allows them to build scalable clusters excelling in machine learning and AI workloads.
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6/ Their custom technology results in a significant cost advantage.
Their GPU and data center power consumption is 20% lower than that of customers.
Thus, their total cost of GPU operation is also around 20-25% lower.
This attracts many fast-growing players like Mistral AI.
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7/ On top of that infrastructure, they built a native cloud platform.
Nebius’ cloud platform was designed specifically for AI, unlike general-purpose clouds like AWS or Google Cloud.
It comes with pre-set tools and configurations to start running AI applications seamlessly.
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8/ They have just announced Q2 earnings.
Results were blockbuster.
They beat both the bottom and top line and raised the full year guidance by 16%.
Yet, this is just the beginning.
They are targeting 1GW contracted capacity by the end of last year.
Even if active capacity reaches half of that, the total capacity will have doubled from the target capacity at this year's end.
This is insane growth.
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9/ Institutional ownership still remains low.
Institutions currently own just 45% of the float.
This means that we are still early in the game.
Once the institutions come in, the stock can go vertical.
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10/ Valuation is still attractive.
Currently, 1MW capacity supports 1,000 Nvidia H100-H200 GPUs.
The cloud price per hour is $2-$3.
At a 60% utilization rate (432 hours per month) and bottom-end pricing ($2), it can generate $1 billion in revenue per 100MW.
Assuming 1GW active capacity by the end of 2027, we are looking $10 billion in revenue in 2 years.
At 5x sales, we have a $50 billion company.
It's valued at just $16 billion today.
I am buying more.
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