Why Nvidia-Backed Nebius Group Stock Skyrocketed Thursday Morning
Key Points
Nebius will raise prices for its on-demand GPU compute by roughly 20% beginning next month.
The company is racing to meet the unprecedented demand.
Nebius is pricey, but that premium is backed by triple-digit growth.
Nebius Group (NASDAQ: NBIS) stock surged sharply higher Thursday morning, gaining as much as 11.2%. As of 2:27 p.m. ET, the stock had given back most of those gains, but was still up 2.1%.
The catalyst that sent the artificial intelligence (AI) and neocloud specialist higher was a report that the company is raising some prices.
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AI demand is off the charts
Nebius is one of several neocloud operators that stockpile graphics processing units (GPUs) and provide on-demand AI processing. The company announced that it will raise the price for access to on-demand Nvidia (NASDAQ: NVDA) GPUs by roughly 20%, effective Oct. 1.
- H100 chips -- $4.50 per GPU hour, up 17%
- H200 chips -- $5.40 per GPU hour, up 20%
- B200 chips -- $8.50 per GPU hour, up 19%
- B300 chips -- $9.50 per GPU hour, up 21%
Daniel Newman, CEO of global technology advisory firm The Futurum Group, addressed the increase in a post on X, saying, "AI demand remains off the charts. [Nebius] raising prices 20% is just another example of that demand."
Nebius is recognized by Nvidia as a Reference Platform Cloud Partner, a designation reserved for select cloud providers that operate large-scale AI clusters optimized with Nvidia's reference architecture. Moreover, the chipmaker holds a 9.3% stake in Nebius, which includes a $2 billion investment announced earlier this year. The partnership also gives Nebius early access to Nvidia's top-of-the-line AI processors.
The accelerating demand is clear in the company's results. In the second quarter, Nebius grew revenue 454% year over year to $582 million. While heavy capital expenditures weighed on the bottom line, the company still slashed its adjusted net loss by 64% to $33 million. Management expects full-year revenue of $3.2 billion and an annualized run rate of $8 billion, both at the midpoint of its guidance.
Nebius has plenty of growth baked in, as the stock is selling for 43 times sales, which is a premium to be sure. However, if the company can continue its triple-digit growth, the combination of scale and leverage will help Nebius turn a profit, likely sooner than later.
Danny Vena, CPA has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.