Fearless performance falls short of expectations, DA Davidson contrarily bullish on AI company Nebius (NBIS.US)

DA Davidson initiated coverage of the artificial intelligence (AI) infrastructure company Nebius (NBIS.US) with a "buy" rating and a price target of $50. DA Davidson analysts stated that Nebius has become one of the "first true alternative solutions" for ultra-large-scale dominant AI computing. The analysts added that Nebius is capitalizing on opportunities created by the "rigid" pricing and artificial supply constraints of platforms like Amazon.com, Inc. AWS, Azure, and Alphabet Inc. Class C cloud, offering specialized AI computing, transparent pricing, and scalable infrastructure. According to a sum-of-the-parts valuation, the analysts stated that assuming revenue of $750 million in 2025, Nebius's core business is valued at $6.9 billion, with net cash bringing the enterprise value to around $12 billion. Ultimately, the demand for AI computing will stabilize, but for now, Nebius's "structural positioning" is absorbing a wide range of long-term AI workloads. After last week's disappointing fourth-quarter results, Nebius's stock price dropped significantly. As of Monday's closing on the US stock market, Nebius was down 9.07% at $36.22.