Nvidia Just Invested in this Exciting AI Data Center Operator

Should you join them ?

AI semiconductor chip giant Nvidia is making lots of people rich.

Nvidia NVDA 0.00%↑ stock has risen more than 1000% in just the last couple of years.

The company currently commands a market capitalization of more than $3 Trillion.

Which makes Nvidia one of the most valuable companies in the whole world.

Analysts expect Nvidia revenues to exceed $129 billion in 2024.

That's up more than 111% from 2013.

Such heady growth has attracted the interest of a wide range of investors, many of whom have been clamoring for Nvidia shares recently.

And who can blame them?

After all, Nvidia controls a commanding share of the market for the chips which power Artificial Intelligence (AI) systems and applications.

And demand for these chips will likely be robust for many years ahead.

Which could drive Nvidia shares higher in the future.

But Nvidia is already so big that it becomes increasingly difficult for the stock to continue climbing at such a rapid rate.

Not to mention that most of you have already bought Nvidia and possibly bagged some hefty profits already.

Which begs the question…

Is there a smaller company stock to invest in which could appreciate even faster than Nvidia over the coming years?

Instead of guessing which companies might be well positioned to benefit from the coming ongoing buildout of the AI ecosystem, let’s see what Nvidia is investing in.

And consider following their lead.

You can easily make the case that no company has more insight into the future of AI than Nvidia itself, since the company’s chips power a substantial majority of all new AI applications.

So why not invest in the same companies that Nvidia itself is investing in?

Like a little-known company called Nebius NBIS 0.00%↑

Nebius develops and operates the advanced data centers which house large numbers of Nvidia’s most advanced AI chips.

The company’s new US data center in Kansas City, for example, has potential capacity to house up to about 35,000 Nvidia GPUs after full expansion. The center is scheduled to go live in the first quarter of 2025.

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According to a recent company press release, Nebius has also opened two new customer-facing hubs in San Francisco and Dallas, with a third office set to open in New York later this year.

Nebius operates additional facilities in the Netherlands, Paris, Belgrade, London, and Tel Aviv.

The company has a team of around 400 engineers with decades of knowledge of building world-class data center infrastructure, as well as an in-house large language model (“LLM”) R&D team.

We believe that Nebius is ideally positioned to benefit from a coming surge in AI data center spending over the coming years.

IDC expects the surging demand for AI workloads will lead to a significant increase in datacenter capacity, with AI datacenter capacity projected to grow at a 40.5% annual rate through 2027.

Nebius is positioning itself to capitalize on this coming tsunami in AI data center spending. 

But here’s the real thing to key in on.

On Dec 2, Nebius announced that it raised $700 million in growth capital from venture capital firm Accel, Orbis Investments

… and most importantly, Nvidia.

Nebius now has nearly $3 billion in cash to build out its global network of next generation AI data centers.

Keep in mind, Nebius is currently trading around a $6B valuation with $3B in cash.

You can do the math …. Wall Street is still way behind on this one. In fact, the company doesn’t even have Wall Street analysts covering the stock yet.

Nebius CEO Arkady Volozh described his plans to deploy this capital to accelerate the company’s growth like this:

“We have demonstrated the scale of our ambitions, initiating an AI infrastructure build-out across two continents. This strategic financing gives us additional firepower to do it faster and on a larger scale.”

What does CEO Volozh mean when he says faster and larger?

He means driving Nebius annualized revenue run rate from $170-190 million in 2024 to upwards of $1 billion by the end of 2025.

That would imply a revenue increase of at least 5x in 2025.

In addition to its rapidly growing data center business, Nebius also operates a data labelling service (Toloka) for generative AI applications and an edtech platform (Triple Ten) helping individuals acquire valuable tech skills.

The company also operates Avride, an autonomous driving technology stack for self-driving cars and delivery robots. This company already has partnerships with Uber UBER 0.00%↑

These businesses have attractive growth prospects, but we expect investors to be mostly attracted to Nebius’ rapidly expanding AI data center operations.

Which leads us to express the following opinion:

Nebius is one of the fastest growing AI-related growth stocks that very few people have heard about yet.

But they will likely hear more as the coming year unfolds.

Especially if competitor Coreweave conducts an Initial Public Offering in 2025.

On Nov 4, Bloomberg reported that Coreweave had selected Goldman Sachs, Morgan Stanley, and JP Morgan to lead its IPO.

A Coreweave IPO would also bring Nebius into the spotlight.

That is because Coreweave operates an almost identical business model as Nebius and they share a common investor … Nvidia.

With data centers around the world craving Nvidia hardware - which ones do you think will get priority shipments?

If you guessed the ones that have an investment from Nvidia - you guessed correctly.

Not to mention Coreweave and Nebius not only run Nvidia hardware, but also Nvidia’s proprietary networking solution Infiniband.

That’s important because after Nvidia’s latest earnings release, it was discovered that Networking sales have slumped over at Nvidia.

Colin covered this in a recent video on YouTube.

We believe that Nvidia will favor data centers like Coreweave and Nebius because they will run both Nvidia hardware and networking solutions - unlike other cloud service providers.

And if Nebius can achieve a valuation using the same price to sales ratio that Coreweave achieved in its last funding round (11x)...

Nebius shares could potentially trade at substantially higher prices over the coming 12-24 months.

And the recent sizable investment from Nvidia and several other large and knowledgeable tech investors gives us even greater conviction that Nebius shares are headed meaningfully higher.

With the backing of industry leader Nvidia and growing interest from large,savvy tech investors, Nebius looks like an ideal way to play the next wave of spending to build out the enormous AI ecosystem.

John

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