Nebius stock has soared 150% this year. Why Citi expects another 30% growth
Citi expects Nebius to grow further after the stock soared 170% / Photo: Nebius Group
Citi analysts have sharply raised the target price of Arkady Volozh's Nebius Group cloud computing provider Nebius shares from $169 to $287, SeekingAlpha reports. The new target assumes growth of quotations by 30% relative to the level of closing of trades on Ma. 14.
On Ma 15 Nebius shares were volatile, going up or down. An hour before the end of the session they were trading 1.5% higher, while the broad market was falling by about 0.9%. Neocloud's capitalization has increased by 150% since the beginning of the year.
Nebius reported strong revenue and earnings results in the first quarter, beating both Citi's forecasts and Wall Street's consensus estimate, noted bank analyst Tyler Radke. The company increased contracted capacity by 1 GW, bringing it to more than 4 GW, thanks to a new facility in Pennsylvania, he pointed out.
Nebius first quarter revenue grew 684% year-over-year to $399 million, with Nebius AI Cloud division revenue of $389.7 million and annual recurring revenue (ARR) of $1.9 billion.
Three signals to the market
Radke highlighted three key signals in Nebius' reporting, in his view.
- Demand for AI infrastructure continues to intensify, with GPU capacity rental prices rising, but Nebius' new and existing facilities are filling up quickly with customers. The company said that for every new GPU server it brings online, more than four customers are claiming capacity.
- The analyst recalled the neocloud's decision to maintain revenue and margin forecasts despite exceeding operational targets and increasing capacity. In his opinion, the current estimate looks intentionally conservative and creates preconditions for improvement in the second-fourth quarters.
- The company's financing model remains less onerous than its competitors, Citi said. 90% of capital expenditures are already secured by cash and contractual obligations.
What other analysts are saying
On Ma 14, investment bank Northland raised its target price for Nebius shares from $215 to $248, up 12% from the last close, and also reiterated a buy recommendation, GuruFocus writes. The reason for the revision of the target was also the company's quarterly reports, which indicated rapid growth in its AI infrastructure business, analysts of the investment bank said. Northland said that the first-quarter results indicate strong demand for Nebius' "neoblack" services and profitability above expectations.
11 of the 16 Wall Street analysts covering Neocloud stock advise buying it. Four take a neutral stance, and only one recommends shorting positions.
This article was AI-translated and verified by a human editor
