Morgan Stanley Initiates Coverage on Nebius Group with $126 Target
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 07 2024
0mins
Should l Buy NBIS?
Source: businesswire
Nebius Group's stock rose by 5.00% as it crossed above the 5-day SMA, reflecting positive investor sentiment.
Morgan Stanley analyst Josh Baer initiated coverage on Nebius Group with an equal-weight rating and a price target of $126, indicating a potential upside of 23.55%. The firm highlighted Nebius's strategic positioning in the AI infrastructure sector and its ambitious goal to connect 700MW of AI cloud infrastructure by 2026, projecting annual recurring revenue to soar from $600 million to between $7 billion and $9 billion. Despite the compelling growth prospects, Nebius faces execution risks related to its scaling strategy, which may pressure short-term profitability.
The initiation of coverage by Morgan Stanley is likely to attract investor interest, as the company's aggressive expansion plans and strong revenue projections position it well in the rapidly growing AI market.
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Analyst Views on NBIS
Wall Street analysts forecast NBIS stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for NBIS is 164.20 USD with a low forecast of 130.00 USD and a high forecast of 211.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
5 Analyst Rating
5 Buy
0 Hold
0 Sell
Strong Buy
Current: 73.870
Low
130.00
Averages
164.20
High
211.00
Current: 73.870
Low
130.00
Averages
164.20
High
211.00
About NBIS
Nebius Group NV is a Netherlands-based infrastructure company operating in the technology industry. The Company is engaged in developing a portfolio of artificial intelligence-related technology assets. It is involved in creating an artificial intelligence-centric player to integrate the essential elements of artificial intelligence development with infrastructure, data and advisory globally. It offers products and services such as a cloud platform for artificial intelligence-related workloads, development team services for autonomous vehicles, development of generative artificial intelligence. Nebius builds full-stack infrastructure to service the growth of the global AI industry, including GPU clusters, cloud platforms and tools and services for developers. Company is developing three other businesses that operate under their own brands: Toloka AI, TripleTen and Avride.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- High Customer Retention: The company's net dollar retention rate stands at 99%, suggesting that once customers become paying users, they are almost guaranteed to continue using its services, thereby providing a stable revenue stream and long-term customer relationships.
- Strong Profitability: DigitalOcean's EBITDA profit margin is around 40%, demonstrating a good balance between spending and revenue, which instills confidence in investors despite competitive pressures in the AI market, ensuring profitability.
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- Synergistic Effect of Nvidia and Broadcom: Nvidia's GPUs have become the primary computing units for AI workloads, while Broadcom focuses on designing custom AI chips for specific workloads, providing investors with diversified options to benefit from sustained growth in the AI market.
- TSMC's Technological Innovation: TSMC's newly launched 2-nanometer chips consume 25% to 30% less power at the same speed as previous 3nm chips, positioning it as the primary manufacturing partner for AI computing hardware, and it stands to benefit from increased AI spending, further solidifying its market position.
- Growth Potential of Nebius: Although Nebius has a market cap of only $21 billion, its annual run rate reached $551 million in Q3, with projections of $7 billion to $9 billion by the end of 2026, making it a potential top-performing stock if it can achieve this growth trajectory.
See More
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- Surging Market Demand: Nebius Group is rapidly expanding due to the explosive growth in demand for AI infrastructure, with multi-billion dollar investments expected to further bolster the company's position in this fast-evolving market.
- Innovation-Driven Growth: The company enhances its product competitiveness through cutting-edge technology, attracting investor interest despite extreme valuations and deep losses, indicating market confidence in its future potential.
- Significant Valuation Risks: While the market outlook remains optimistic, Nebius Group's extreme valuations and ongoing losses present serious downside risks, necessitating cautious evaluation of its long-term investment value by investors.
- Stock Price Volatility: Market prices as of January 21, 2026, reveal significant stock price fluctuations, reflecting high uncertainty regarding the company's future performance, which may influence investor decision-making.
See More
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- Key Factors in AI Economy: Futurum Equities' latest AI Fifteen report identifies computing, data, deployment, and security as critical factors defining the AI economy, emphasizing their importance for future development.
- Broadcom Revenue Growth: Broadcom (NASDAQ:AVGO) reported AI chip revenue of $6.5 billion this quarter, with guidance of $8.2 billion next quarter, indicating nearly 100% year-over-year growth and showcasing its strong performance in the AI market.
- Backlog Situation: The company's backlog across XPUs, switches, optics, and racks exceeds $73 billion, reflecting its dominant position in the AI semiconductor market and ongoing growth potential.
- Competitive Market Advantage: Broadcom launched its first Wi-Fi 8 access point and switch, further solidifying its position in the AI-driven networking market, while ranking in the 96th percentile for quality and 78th for momentum in Benzinga's performance metrics, demonstrating its robust market performance.
See More
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- Market Positioning Advantage: Nebius's focus on deep platform integration and flexible GPU access, along with expansion across key global availability zones, positions it as a significant player in next-generation cloud infrastructure, expected to drive sustained growth in the coming years.
- Optimistic Investment Outlook: Meeks anticipates that Nebius will achieve rapid revenue growth and operating leverage over the next several years, bolstering its competitiveness in an expanding market while supporting ongoing investments in AI-focused product development and infrastructure.
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