Citron Research’s Andrew Left has been making some big calls lately. Recently, Left found himself shorting Michael Saylor’s company, MicroStrategywhich suggests that the data company and large buyer of Bitcoin now trades independently of Bitcoin fundamentals. The call is interesting because Citron and Left said four years ago that MicroStrategy was the best way to gain exposure to Bitcoin, although part of the short thesis is due to expanding access to Bitcoin .
The left is now making another bold call, claiming it has found Wall Street’s next artificial intelligence (AI) darling. The call came on the same day as the king of AI chips Nvidia participated in a $700 million private placement for the company that also included venture capital giant Accel and global investment firm Orbis Investments. Let’s meet this potential new AI darling and see if it’s as promising as Left says.
From Russia with love
Citron’s cry and Nvidia’s investment may be the first time you’ve heard of the AI infrastructure company Nebius Group (NBIS 20.15%). How is this possible? Well, Nebius has had an interesting journey.
Until October, the stock had not been traded on public markets for three years. Indeed, the Amsterdam-based company was once owned by a Russian search engine giant called Yandex. After Russia invaded Ukraine, the United States imposed sanctions on Russian-affiliated companies. Earlier this year, the international assets were spun off from Yandex in a $5.4 billion deal. Nebius was found to have four divisions, including cloud, data labeling, self-driving automobiles, and educational technology, and Nebius began trading again on Nasdaq on October 21.
Nebius is part of a growing list of companies that lease their infrastructure to AI companies. Powering AI is expensive and power-intensive because it involves storing large amounts of data and hardware that powers the AI language models. Nebius provides computing capacity, storage, and tools and services to developers. The company’s core AI platform is intended to handle massive AI workloads. Companies looking to develop AI capabilities can pay a subscription to use the infrastructure offered by companies like Nebius.
A quick find
It didn’t take long for investors to discover Nebius: the stock is up 55% over one year after Nvidia’s announcement and the acquisition of Citron. In an article on the market did not understand its enormous potential – nor its undervaluation compared to CoreWeave.CoreWeave is another AI infrastructure company that is rumored to be preparing a public offering that could value the company at $35 billion. If Nebius trades at a 50% discount to CoreWeave, that would will result in a stock price of $60, according to Citron trading below $28 when Citron reported on December 3.
Citron also said that CEO Arkady Volozh, who resigned from the company after the initial sanctions but is now back, “is the real deal.” The researcher also said that Nvidia was waiting for the company to finalize the spinoff from its Russian parent to announce the deal. Interestingly, Nebius, on its website, states that its customers will be among the first to use Nvidia’s next-generation Blackwell platform. Nebius project revenues will increase by 200-300% in 2025 to a range of $500-700 million. The company plans to spend between $600 million and $1.5 billion to expand the capacity of its data centers in Finland, France and North America.
It’s always nice to find the stocks you’re interested in before they’re covered by the Street. Wall Street analysts have the ears of many institutional investors in large funds that can shake things up, although Nvidia’s investment and Citron’s attention anticipated some of that.
Nebius is not yet profitable, but its revenue is growing quickly and has about $2.3 billion in cash on its balance sheet and very little debt. Nebius also operates in a huge market and already has some sort of partnership with Nvidia. Let’s also not forget that it is located in one of the hottest sectors of the stock market and enjoys huge valuations. Investors can certainly take a starting position. There may be some push and pull given the company’s history, but the stock looks cheap compared to other AI names.
Bram Berkowitz has positions in Bitcoin. The Motley Fool holds positions and recommends Bitcoin, Nebius Group and Nvidia. The Motley Fool has a disclosure policy.