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Reviewing a strong quarter that seems under-appreciated by investors
Nebius (NASDAQ:NBIS) reported its results for Q1 on May 20th. It may have been the last significant IT company to report results for its
Nebius: Explosive Growth At What Is Still A Reasonable Valuation
Summary
- Nebius delivered a standout Q1, with ARR surging 177% sequentially and revenue up 385% year-on-year, confirming hyper-growth in demand for its AI infrastructure solutions.
- My buy recommendation is reaffirmed: Nebius’s differentiated full-stack AI platform, rapid capacity expansion, and strong management underpin its ambitious multi-billion dollars of revenue with an adjusted 20%-30% EBITDA margin.
- Risks include execution, capital intensity, and hyperscaler competition, but Nebius’s unique approach and Nvidia partnership provide a credible path to sustained high growth.
- Shares are volatile and best suited for risk-tolerant, patient investors; I see extraordinary upside potential as Nebius scales toward profitability and enterprise adoption.
- Nebius has a deep and strong management team, well suited to execute its strategy and to achieve its ambitious goals.
Bert Hochfeld graduated with a degree in economics from the University of Pennsylvania and received an MBA from Harvard. Mr. Hochfeld has enjoyed a long career in the tech world, working for IBM, Memorex/Telex, Raytheon Data Systems, and BMC Software. Starting in the 1990s, Mr. Hochfeld worked as a sell-side analyst and won awards from the Wall Street Journal for his coverage of the software space. In 2001, Mr. Hochfeld formed his own independent research company, Hochfeld Independent Research Group, which provided research services to major institutions including Fidelity, Columbia Asset, SAC Capital, and many other prominent institutions and hedge funds. He also operated the Hepplewhite Fund, a hedge fund that specialized in technology investments. Hedge Fund Research, an independent 3rd party firm that specializes in ranking managers, rated the Hepplewhite Fund as the best performing small-cap fund for the 5 years ending in 2011. In 2012, Mr. Hochfeld was convicted of misappropriating funds from a hedge fund he operated. Mr. Hochfeld has published more than 500 articles on Seeking Alpha, all dealing with companies in the information technology space. Highly esteemed for his investment wisdom accumulated over decades, Mr. Hochfeld ranks in the top 0.1% of Tip Ranks analysts for his selection of information technology stocks and their subsequent successes.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of NBIS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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