Nebius Could Stand Apart In AI Cloud, Says William Blair – Sees Valuation Understating Long-Term Earnings Power

• William Blair initiated Nebius stock to ‘Outperform’ and sees the company’s ARR approaching $22 billion by the end of 2027.
• According to William Briar, Nebius stock’s current valuation creates a favorable risk/reward for investors.
• Nebius’ second-quarter revenue jumped 454% year over year to $582.3 million, while the company raised $5.75 billion through convertible notes.

William Blair initiated coverage of Nebius Group N.V. (NBIS) with an ‘Outperform’ rating, saying the company has many of the attributes needed to become a differentiated AI-native cloud platform.

According to TheFly, analyst Jason Ader highlighted Nebius’ infrastructure scale, software capabilities, major customer relationships and low-cost access to capital as key strengths that could help set it apart from other neocloud providers.

Ader said Nebius is “not just another neocloud”. NBIS stock’s current valuation does not fully reflect the company’s long-term earnings power, the firm said, adding that it creates a favorable risk/reward for investors.

Wall Street Expectations Have Moved Higher

William Blair’s initiation follows a bullish call from BNP Paribas last week. The firm upgraded Nebius to ‘Outperform’ from ‘Neutral’ and raised its price target to $399 from $260, saying the company’s outlook had “meaningfully improved” since the firm initiated coverage in June, according to TheFly.

The analyst said Nebius could approach $22 billion in annual recurring revenue (ARR) exiting 2027. BNP also argued that while consensus expectations increased after second-quarter results, Nebius’ eventual 2027 guidance could “materially reset” estimates higher.

Nebius reported second-quarter revenue of $582.3 million, up 454% year over year.

Capital And Customers Back The Buildout

The balance-sheet access William Blair highlighted has been evident in Nebius’ recent financing activity. The company closed a $5.75 billion convertible-note offering in August, providing additional capital as it expands its AI cloud infrastructure.

Nebius has also secured large customer commitments. Its five-year agreement with Meta Platforms (META) carries a potential value of up to approximately $27 billion, while the company said in July that it had more than $40 billion of additional contracted revenue from investment-grade customers including Microsoft and Meta.

Earlier this month, Palantir (PLTR) named Nebius its preferred sovereign AI infrastructure partner under a strategic agreement to bring Nebius compute and inference capabilities to eligible Palantir customers.

What Retail Thinks About NBIS Stock

On Stocktwits, retail sentiment around NBIS stock remained ‘neutral’ amid high message volume.

So far this year, NBIS stock has rallied nearly 164%. In comparison, the First Trust NASDAQ-100-Technology Sector Index Fund (QTEC) and the Defiance Quantum ETF (QTUM), which hold the stock, have risen around 35% and 42%, respectively, over the same period.

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