Volozha's Nebuis increased revenue sevenfold year over year. Shares soared 19% after the report

Shares of Arkady Volozh's Nebius, a Kazakh-born AI startup and co-founder of Yandex, jumped nearly 19% in trading on August 7 after a strong quarterly report. Nebius, which rents out cloud servers for AI work, reported a 625% increase in sales and forecast an annual revenue growth rate of about $1 billion. In July, Goldman Sachs advised buying Nebius shares and predicted a 50% increase.

Shares of Arkady Volozh's Nebius Group jumped 18.6% to $65.31 in trading Thursday following the release of its second-quarter report. The company reported that it expects this year's annualized revenue rate (ARR, calculated by multiplying sales for the last month of the reporting quarter by 12) to be between $900 million and $1.1 billion. In doing so, Nebius improved its previous forecast ($750 million to $1 billion).

"The demand for AI infrastructure - computing power, software and services - will only continue to grow as new use cases emerge," said Nebius CEO Arkady Volozh. - We are actively building out capacity to take advantage of this significant opportunity and are already working to secure more than 1 GW of power for our data centers and GPU clusters by the end of 2026."

The cloud provider, in which chipmaker Nvidia invested, showed significant revenue growth: up 625% from the second quarter of 2024. Sales totaled $105.1 million, while Wall Street had expected $101 million, according to a FactSet estimate, writes Investor's Business Daily.

Net loss grew by 48.5% to $91.5 million. The company late last year reported plans to invest $1 billion in developing AI infrastructure in Europe. It is also expanding its infrastructure in the U.S., including the construction of data centers in Kansas City and New Jersey.

D.A. Davidson analyst Alexander Platt raised his target price on Nebius securities to $75 from $65 after the quarterly report, reported Investor's Business Daily. That's nearly 15% above Thursday's closing price. Platt recommends buying Nebius shares as part of DaVinci's program, which focuses on potentially breakout companies and other factors rather than short-term financials or multiples. "A strong second quarter was bolstered by core business revenue that exceeded expectations and an acceleration of data center expansion plans," Platt wrote in a note cited by Investor's Business Daily.

"Nebius reached an important milestone by reporting a more than $1 billion annualized revenue rate (ARR) after doubling revenue quarter-over-quarter," noted Seeking Alpha analyst Jack Bowman. - This is exactly the growth rate needed to justify the company's current valuation, and a great signal to shareholders that the demand for AI infrastructure isn't going anywhere anytime soon."

Nebius' securities are up more than 135% since the beginning of the year. In total, they are tracked by five analysts, according to MarketWatch, and all of them recommend buying the stock (four rating Buy and one Overweight). Last month, coverage of the stock with a Buy rating was started by Goldman Sachs. The Wall Street consensus price target is $68.8, up 5.3% from Thursday's closing price.

Amsterdam-based Nebius last year changed its name from Yandex NV after selling its Russian assets. The company relaunched the business with a focus on cloud-based AI solutions, and its shares started trading again on the Nasdaq on Oct. 21. In December, Nebius announced raising $700 million through a private placement from a group of investors that included Nvidia. In June, the company additionally received $1 billion in debt financing, Investor's Business Daily reported.

Nebius Group offers a cloud infrastructure and software platform, which it positions as optimal for solving resource-intensive artificial intelligence tasks. The company intends to wrest market share from cloud segment leaders such as Amazon and Microsoft, and competes with the recently listed CoreWeave. In addition to AI infrastructure, Nebius Group includes autonomous transportation developer Avride, education technology company TripleTen, and Toloka, a software developer that prepares data to train AI models. Nebius also has a minority stake in Clickhouse, a rival data analytics software developer to Snowflake.

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