"Not Just Another Neocloud": William Blair Recommends Buying Nebius Shares

On September 30, investment bank William Blair initiated coverage of shares in Nebius, the AI cloud computing provider founded by Arkady Volozh, according to Seeking Alpha. Analysts assigned the stock an “Outperform” rating, which is equivalent to a buy recommendation.

During trading on Wednesday, September 30, the company's stock fell 0.6%. Since the beginning of the year, it has risen more than 180%.

William Blair believes that Nebius could benefit from the commissioning of AI computing capacity that has already been contracted and from an increase in its utilization rate.

According to analysts, this is “not just another cloud service.” “Nebius is evolving from a GPU capacity provider into a full-fledged cloud platform specifically designed for AI. It handles model training, inference, and performs agent-based tasks,” CNBC quotes the bank’s note as saying. “At the same time, the company occupies a unique position between general-purpose hyperscalers and AI cloud providers, which are more focused on infrastructure.”

Analysts highlighted Nebius’s strong points as its stable financial position, broad cloud architecture, and significant short-term potential driven by its proprietary software and higher-level AI services. The company was among the first non-cloud providers to enter the market and has already proven its ability to secure access to power and AI infrastructure for data centers, as well as to raise capital, according to a note from William Blair. Analysts believe that the next step for Nebius will be to expand its software products and services, as well as to compete directly with the largest cloud providers for AI workloads.

Nebius's largest clients are currently Microsoft and Meta. In the second quarter, the cloud provider signed four contracts with an average value of over $1 billion. Specifically, new major clients include Cohere, a developer of AI solutions; Reflection AI, a creator of AI models; and an unnamed major U.S. trading firm that uses the platform’s infrastructure for algorithmic trading.

Nebius Group’s total revenue for the quarter jumped 454% to $582 million, while the AI Cloud division’s annual recurring revenue (ARR) reached $3 billion as of the end of June, according to Seeking Alpha. By comparison, competitor CoreWeave’s revenue grew 112% in the second quarter to $2.6 billion, with Microsoft, OpenAI, Meta, Anthropic, Cohere, and Mistral among its clients. Analysts at William Blair recommended buying CoreWeave shares.

This article was AI-translated and verified by a human editor