From Microsoft Corporation to NVIDIA Corporation and then to Meta: Nebius (NBIS.US), why did they win the "vote with money" of the three technology giants?

The Nebius Group (NBIS.US) has received a $2 billion investment from NVIDIA Corporation (NVDA.US) and a $27 billion GPU infrastructure order from Meta Platforms (META.US), boosting market confidence significantly. The management of Nebius has demonstrated strong execution power, meeting capacity commitments on schedule, and setting realistic expectations for AI infrastructure growth. Although the recent bond issuance increases risk, it is necessary for Nebius to accelerate its revenue growth to 250% by 2027 (surpassing market expectations of 186%). The stock is currently valued at around 10 times forecasted revenue for 2026, and as revenue growth accelerates, the valuation multiple is expected to expand. Financial analyst Uttam Dey has written an article endorsing a "strong buy" rating. Investment Logic For the cloud startup company Nebius Group N.V., last week was the best-performing week so far, as the stock price rose due to the news of a $2 billion investment from NVIDIA Corporation. NVIDIA Corporation's investment is a significant vote of confidence in Nebius, strongly indicating that NVIDIA Corporation is diversifying its presence in the cloud computing industry or hedging risks by acquiring Nebius shares. Uttam believes that the stability and reliability displayed by Nebius management in driving AI infrastructure development have potential appeal to NVIDIA Corporation and an increasing number of hyperscale cloud service provider customers focusing on its GPU infrastructure portfolio. A few days ago, the $27 billion GPU infrastructure order with Meta Platforms and Nebius once again affirmed the importance of Nebius and its crucial role in providing reliable GPU infrastructure to stakeholders. Subsequently, Nebius announced a convertible bond issuance, which put pressure on the stock price, shifting market focus back to the capital-intensive nature of running such a startup cloud enterprise. However, Nebius has strong potential for explosive revenue growth, which is why Uttam continues to have a positive outlook on this cloud startup. The following sections will provide more details. The Significance of the NVIDIA Corporation and Meta Platforms Transactions for Nebius and Investors Last September, after explaining how the $17 billion order from Microsoft Corporation would pave the way for Nebius to increase its ARR by at least $3.5 billion annually, analyst Uttam made a double upgrade to his bullish expectations, strongly suspecting that "at least one of the four hyperscale cloud service providers, aside from Microsoft Corporation, would grant Nebius contracts worth billions of dollars." By December last year, Nebius management announced that it had signed Meta Platforms as its second-largest hyperscale customer, reaching a five-year agreement worth $3 billion. Initially, Uttam found the contract size slightly confusing, and given that several of Nebius's peers had won orders exceeding $5 billion, he did not update his views in the fourth quarter of last year. However, Nebius management did leave clues during the third-quarter conference call, strongly suggesting that there would be more cooperation with Meta: "At that time, we signed another major deal with Meta, worth about $3 billion over the next 5 years. The demand for this type of capacity is extremely strong, and the contract size is limited by the available capacity at that time. This means that if we had more capacity, we could have sold more. This deal was another outcome beyond the Microsoft Corporation contract we announced in early September (with a contract value ranging from $17.4 billion to $19.4 billion). As previously stated, we expect to sign more such long-term large contracts, and we are delivering on that promise." The only direct conclusion Uttam drew from the content of Nebius management's third-quarter conference call last year was that Nebius had only promised Meta the portion of actual capacity that they could deliver. On subsequent disclosures, the management announced the transaction to the market truthfully not more, not less. At the time, the management aimed to secure 2.6 GW of contracted power, with about 1 GW of GPU capacity coming online this year according to the previous plan. In February this year, the management revealed that they had secured 2 GW of contracted power and raised the target to ensure 3 GW of contracted power, while maintaining the target of bringing about 1 GW of GPU capacity online this year. In February, Nebius also revealed that all of the promised capacity as part of the $3 billion contract with Meta Platforms had been delivered. This delivery capability may be enough for the Meta team to grant Nebius a larger contract, leading to the announcement of the $27 billion new order yesterday. According to the announcement, Nebius has committed to delivering additional GPU capacity to Meta Platforms. The five-year deal is structured in two tiers, with a total value of $27 billion. The first tier of GPU capacity, worth $12 billion in future revenues, is a dedicated GPU capacity specifically built for Meta Platforms, using the NVIDIA Corporation Vera-Rubin platform, and will be launched from 2027 onwards. The remaining $15 billion in future commitments will be delivered to Meta after Nebius fulfills its obligations to Microsoft Corporation (with a $17 billion commitment) and other clients in the next five years. The $17 billion contract with Microsoft Corporation from last year and the $3 billion contract with Meta Platforms imply approximately $3.5 billion in future revenue this year. According to Uttam's estimates, this would be 6.2 times the 2025 revenue, slightly higher than the middle of the market's expected range of $3.3 billion. Based on Nebius's target of ensuring 3 GW of contracted power by 2026, the analyst had previously forecasted a middle value of $9.5 billion for the 2027 revenue, approximately three times the 2026 revenue. The $27 billion Meta order will undoubtedly change next year's revenue expectations. Nebius is highly likely to achieve a minimum of $11.5 to $12 billion in future revenue next year, indicating a revenue growth rate of 3.5 to 3.6 times in 2027. Clearly, there is a risk of project delays and funding risks. However, Uttam believes that NVIDIA Corporation's $2 billion investment will play a crucial supporting role for Nebius. Currently, the analyst makes the following assertion about the Nebius management: do not underestimate them, they are practical executioners. The Nebius management only promises what they can deliver, discloses to investors only the orders they can fulfill, and sets realistic expectations for future capacity for investors. Uttam firmly believes that the current management team at Nebius understands the stakes of AI infrastructure development in the current era and the importance of leading competitors in winning AI inference competitions for the giants. Nebius understands the scale and significance of upcoming AI capital expenditures. If executed properly, it will easily grow into one of the most critical infrastructure partners in the AI industry, connecting suppliers like NVIDIA Corporation, hyperscale cloud service providers, and top AI research labs. Undervaluation of Nebius Currently, the valuation multiple of Nebius stock corresponds to around 10 times forecasted revenue for 2026. This multiple is close to the bottom of its historical trading range (around 6 times), rather than the top. Therefore, there is ample room for upward expansion of Nebius's forward revenue multiples. This year, Nebius's forecasted revenue growth for 2026 is expected to accelerate further, so its valuation should reach at least 15 times forecasted revenue, indicating a potential increase of over 47% compared to the current level. Risks and Other Considerations The primary risk that investors should be aware of is the concentration of revenue risk. Currently, Microsoft Corporation and Meta Platforms are its two major customers and revenue sources. Another two risks are the possibility of poor execution and project funding depletion. Nebius's larger peer, CoreWeave, has demonstrated the damaging effects of execution failures on prospects. Uttam believes that the management at Nebius is stronger in managing these risks and has demonstrated the ability to coordinate various stakeholders' interests. For example, NVIDIA Corporation's $2 billion investment can serve as some form of guarantee, helping Nebius acquire financing at favorable rates. Receiving investment from NVIDIA Corporation also means that the management does not have to dilute shareholders through ATM issuances. For NVIDIA Corporation, this GPU manufacturer is hedging risks in the startup cloud field. They are not betting everything on CoreWeave but are diversifying by investing in Nebius to enhance their presence in the rapidly and sustainably growing startup cloud business. After announcing a private placement of approximately $4 billion in convertible bonds this morning, the stock price faced pressure. This shift in focus back to the capital-intensive nature of operating Nebius and similar startup cloud companies. However, Uttam believes that investors should focus on the operational efficiency of the Nebius management, as they are rigorously steering the company towards an era of revenue growth many times over. In conclusion, investing in Nebius does come with risks, with execution and financial risks greater than concentration risk. However, Uttam believes that when fulfilling commitments, Nebius always places customer and shareholder interests first. The NVIDIA Corporation GTC 2026 conference is currently underway, with Nebius emphasizing how its "token factory" is making its NeoCloud reasoning platform vision more aligned with NVIDIA Corporation's vision for Siasun Robot & Automation and physical AI. This deepening relationship with NVIDIA Corporation is highly constructive for Nebius, and investors should pay attention to more updates from GTC 2026. Conclusion Analyst Uttam continues to strongly endorse Nebius, particularly after the company brought NVIDIA Corporation on board as a significant shareholder and secured the $27 billion contract with Meta Platforms. These two developments are significant votes of confidence in Nebius, highlighting that its current valuation level of only 10 times forward revenue is significantly undervalued.