From Microsoft to NVIDIA to Meta: What gives Nebius the edge to win the "money vote" from the three tech giants?

According to Zhitong Finance APP, Nebius Group (NBIS.US) has received a $2 billion investment from NVIDIA (NVDA.US) and a $27 billion GPU infrastructure order from Meta Platforms (META.US), significantly boosting market confidence. The management of Nebius has demonstrated rigorous execution capabilities, fulfilling capacity commitments as scheduled and setting realistic expectations for AI infrastructure growth. Although the recently announced bond issuance increases risk, it is necessary for Nebius to accelerate its revenue growth to 250% by 2027 (exceeding the market expectation of 186%). The stock is currently valued at only about 10 times its projected revenue for 2026, and as revenue growth accelerates, the valuation multiple is expected to expand. Financial analyst Uttam Dey strongly recommends the stock, reiterating a "strong buy" rating.

Investment Logic

For the newly established cloud company Nebius Group N.V., last week was arguably its best-performing week to date, with the stock price rising due to NVIDIA's announcement of a $2 billion investment.

NVIDIA's investment is a significant vote of confidence in Nebius, strongly suggesting that NVIDIA is diversifying its layout or hedging risks in the cloud computing industry by acquiring shares in Nebius.

Uttam believes that the stability and reliability demonstrated by Nebius's management in promoting AI infrastructure construction have potential appeal to NVIDIA and an increasing number of large-scale cloud service customers focusing on its GPU infrastructure portfolio.

A few days ago, the $27 billion GPU infrastructure order reached between Meta Platforms and Nebius further confirmed Nebius's importance and its key role in reliably providing GPU infrastructure to stakeholders.

Subsequently, after Nebius announced the issuance of convertible bonds, the stock price came under pressure, and market attention refocused on the capital investment required to operate such capital-intensive new cloud enterprises.

However, Nebius has extremely strong potential for explosive revenue growth, which is why Uttam continues to be optimistic about this new cloud company, as will be detailed below.

The Significance of the NVIDIA and Meta Transactions for Nebius and Investors

In September last year, after explaining how Microsoft's $17 billion order paved the way for Nebius to increase its annual recurring revenue (ARR) by at least $3.5 billion, analyst Uttam upgraded his bullish expectations. At that time, he strongly suspected that "at least one of the four major large-scale cloud service providers, besides Microsoft," would grant Nebius multi-billion dollar contracts.

By December last year, Nebius's management announced that it had signed Meta Platforms as its second-largest large-scale customer, reaching a five-year agreement worth $3 billion. Initially, Uttam was slightly confused by the scale of the contract, and given that several of Nebius's peers had secured orders exceeding $5 billion, he did not update his views in the fourth quarter of last year However, the management of Nebius did leave some clues during the third-quarter conference call, strongly suggesting that there will be more collaboration with Meta:

"We signed another significant agreement with Meta at that time, worth approximately $3 billion over the next five years. In fact, the demand for such capacity is extremely strong, and the scale of the contract was limited by our available capacity at that time, which means that if we had more capacity, we could have sold more. This deal is another achievement beyond the Microsoft contract we announced in early September (with a contract value between $17.4 billion and $19.4 billion). As previously mentioned, we expect to sign more such long-term large orders, and we are delivering on that promise."

The only direct conclusion Uttam drew from the management's third-quarter conference call last year is that Nebius only committed to Meta for the portion it could actually deliver. Subsequently, the management truthfully disclosed the transaction to the market as promised—neither more nor less. At that time, the management expected to secure 2.6 GW of contracted power, of which approximately 1 GW of GPU capacity was expected to come online this year according to previous plans.

In February of this year, the management revealed that it had secured 2 GW of contracted power and raised the target to secure 3 GW of contracted power, while maintaining the goal of bringing approximately 1 GW of GPU capacity online this year.

Nebius also disclosed in February that all capacity previously committed to Meta Platforms as part of the $3 billion contract had been fully delivered to Meta. This fulfillment capability may be sufficient for the Meta team to grant Nebius a larger contract, leading to the announcement of the new $27 billion order yesterday.

According to yesterday's announcement, Nebius now commits to delivering additional GPU capacity to Meta Platforms under a five-year deal structured in two tiers, with a total value of $27 billion. The first tier of GPU capacity, valued at $12 billion in future revenue, is dedicated GPU capacity specifically designed for Meta Platforms, which will utilize NVIDIA's Vera-Rubin platform and will gradually come online starting in 2027.

The remaining $15 billion in future commitments will be delivered to Meta after Nebius fulfills its obligations to other clients, such as Microsoft (with a $17 billion commitment), over the next five years.

Last year's $17 billion Microsoft contract and the $3 billion Meta Platforms contract imply approximately $3.5 billion in future revenue this year. According to Uttam's estimates, this will be 6.2 times the revenue expected in 2025, slightly above the median market expectation of $3.3 billion. Based on Nebius's target of securing 3 GW of contracted power/1 GW of online power by 2026, analysts previously predicted a median revenue of $9.5 billion for 2027, about three times the revenue for 2026.

This $27 billion Meta order will undoubtedly change next year's revenue expectations, and Nebius is very likely to achieve a minimum of $11.5 billion to $12 billion in future revenue next year, implying a revenue growth rate of 3.5 to 3.6 times by 2027 Clearly, there are both project execution delays and financing risks. However, Uttam believes that NVIDIA's $2 billion investment will play a key supportive role for Nebius.

Currently, the analyst makes the following assertion about Nebius's management: do not underestimate them; they are pragmatic doers.

Nebius's management only commits to what they can achieve, only discloses orders that can be fulfilled to investors, and sets realistic expectations for future capacity with investors. Uttam firmly believes that Nebius's current management team understands the stakes of the AI infrastructure construction era and recognizes the importance for giants to win the AI inference race against leading competitors.

Nebius is well aware of the scale and significance of the upcoming AI capital expenditures, and if executed properly, it will easily grow to become one of the most critical infrastructure partners in the AI industry, connecting suppliers like NVIDIA, hyperscale cloud service providers, and top AI frontier laboratories.

Nebius Valuation is Undervalued

Currently, Nebius's stock price corresponds to a valuation multiple of about 10 times its projected revenue before 2026. This multiple is close to the bottom of its historical trading range (around 6 times) rather than the top. Therefore, Nebius's forward revenue multiple has ample room for upward expansion.

This year, Nebius's revenue growth for 2026 is expected to accelerate further, so its valuation should at least reach 15 times forward revenue, implying an upside potential of over 47% from the current level.

Risks and Other Considerations

The primary risk investors need to be aware of is revenue concentration risk. Currently, Microsoft and Meta Platforms are its two major clients and sources of revenue.

The other two major risks are the possibility of poor execution and project funding depletion. Nebius's larger peer, CoreWeave, has demonstrated the damage that execution errors can cause to prospects. Uttam believes that Nebius's management team is more capable of managing these risks and has shown the ability to coordinate the interests of various stakeholders.

For example, NVIDIA's $2 billion investment could serve as a form of guarantee, helping Nebius secure financing at favorable rates. Obtaining NVIDIA's investment also allows the management team to avoid using ATM issuances that would dilute shareholders. For NVIDIA, this GPU manufacturer is hedging risks in the new cloud space. They are not betting all their chips on CoreWeave but are diversifying their layout through investment in Nebius, which has clearly demonstrated the ability to rapidly and sustainably grow its new cloud business.

This morning, after the company announced the issuance of approximately $4 billion in private convertible bonds, the stock price faced pressure. This has shifted the market's focus back to the massive capital required to operate new cloud companies like Nebius. However, Uttam believes that investors should pay attention to Nebius's management team's operational efficiency; they are steering the company rigorously towards an era of multiple revenue growth In summary, investing in Nebius does carry risks, with execution and funding risks being greater than concentration risks. However, Uttam believes that Nebius always prioritizes the interests of its customers and shareholders when fulfilling its commitments.

The NVIDIA GTC 2026 conference is currently underway, and Nebius emphasized how its "token factory" brings its NeoCloud inference platform vision closer to NVIDIA's concept of robotics and physical AI. This deepening relationship with NVIDIA is highly constructive for Nebius, and investors should pay attention to more updates from GTC 2026.

Conclusion

Analyst Uttam remains strongly optimistic about Nebius, especially after the company brought NVIDIA on board as a significant shareholder and secured a massive $27 billion contract with Meta Platforms. These two developments are a significant vote of confidence for Nebius, highlighting that its current valuation level of only 10 times forward revenue is clearly undervalued