NVIDIA Corporation (NASDAQ: NVDA) has acquired a 9.3% stake in neocloud operator Nebius Group (NASDAQ: NBIS), as revealed in a recent Schedule 13G filing. This investment, part of a $2 billion private placement from earlier this year, is designed to enhance downstream compute demand and bypass legacy hyperscaler limitations. Following this announcement, Nebius shares surged approximately 16% intraday, reflecting market validation of the specialized AI infrastructure model.
Nebius has secured $775 million in senior secured debt, maturing in 2030 and backed by GPU infrastructure and contracted cash flows, aiming to expand its computing capacity to 5 gigawatts by 2030. This expansion is driven by a significant $50 billion backlog, as clients like Meta Platforms Inc. and Microsoft Corporation increasingly move away from traditional cloud services. Valuation insights by Freedom Capital Markets indicate Nebius trades at a projected five times enterprise value-to-EBITDA multiple, with Northland Capital Markets suggesting a price target of $410.
The transition toward specialized AI infrastructure is gaining momentum, evidenced by companies like CoreWeave (NASDAQ: CRWV) and Hut 8 Corp. (NASDAQ: HUT), which are shifting focus from cryptocurrency mining to AI data centers. Meanwhile, legacy players such as Oracle Corporation (NYSE: ORCL) are contending with rising credit constraints, lacking the agility to address the evolving demands of generative AI workloads.
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