Here’s Why Nebius Group Nearly Doubled in the First Half of 2025

Shares of Nebius Group (NBIS -4.57%) nearly doubled in the first half of 2025, rising 99.7% through June 30, according to data from S&P Global Market Intelligence.

Nebius is a “new” version of an old company called Yandex, which had been known as the “Russian Google.” After Russia invaded Ukraine in 2022, Yandex divested its Russian assets, reheadquartered in Amsterdam, and then went about using its data center expertise to build a European artificial intelligence (AI) “neocloud” in the vein of CoreWeave (CRWV -9.01%). The company relisted on the Nasdaq in August 2024.

Coming into 2025, Nebius therefore looked like a start-up, with lots of cash, in-progress assets, and little revenue; however, the company soon showed explosive growth that led to widespread optimism it would become a major AI winner.

Another Nvidia-backed neocloud showing triple-digit growth

Back in December 2024, Nebius raised $700 million in a private placement led by Nvidia (NVDA 0.53%). Thus, like CoreWeave, Nebius became one of the neocloud “horses” upon which Nvidia is betting. As the large cloud-computing providers increasingly turn to their own in-house designed AI chips to save money, Nvidia appears to be backing several top-tier “neoclouds,” which likely get a preferred allocation of Nvidia graphics processing units (GPUs).

That early access to the latest Nvidia Blackwell GPUs, along with expertise in running AI GPU infrastructure, gives these companies an advantage. Thus, Nebius and CoreWeave have shown explosive growth as they rent out their infrastructure to hyperscale cloud companies or directly to AI companies such as OpenAI.

As an early-stage tech company, Nebius’ stock was highly volatile during the first half of the year, falling hard after the DeepSeek R1 model was released and then again following April 2 “Liberation Day.” Yet when all was said and done, Nebius’ stock nearly doubled by June 30. That came on the back of strong triple-digit revenue growth, lending credence to Nebius’ forward guidance at the beginning of the year.

Image source: Getty Images.

May was a big month for Nebius, as it reported first-quarter revenue growth of 385% and 684% growth in annualized recurring revenue (ARR), which leapt to $249 million by the end of Q1. And that growth came with margin expansion, as Nebius’ operating costs only grew by 96% in the same period. The massive revenue inflection seemed to vindicate Nebius’ initial guidance to reach between $750 million and $1 billion in ARR by the end of 2025.

During Q1, Nebius also made an interesting majority investment in Toloka, an expert data provider to AI companies. It was clear in the early stages of AI that sometimes AI gets things wrong or “hallucinates.” That’s why having good data is crucial, which is where Toloka comes in. Toloka is also backed by Jeff Bezos’ venture company Bezos Expeditions, as well as by Mikhail Parakhin, the CTO of Shopify.

After surging over 60% in May, Nebius rocketed another 50%-plus in June following a strong endorsement by boutique sell-side firm Arete Research. In an early-June analyst note, Arete’s Andrew Beale slapped a $84 price target on Nebius, which is still nearly double today’s stock price and was even 50% higher than Nebius’ June 30 highs. Arete liked Nebius’ execution and the “embedded value” of its AI clusters, given an apparent shortage of Nvidia Blackwell GPUs.

Can Nebius keep climbing?

At first, Nebius seems very expensive, trading for about 20 times this year’s revenue estimates. However, if the company hits the high end of its end-of-year ARR guidance, then the stock is trading at a more reasonable 10 times forward ARR.

That’s not unreasonable for a company experiencing hypergrowth and expanding margins. However, it’s very early in the AI races and in Nebius’ revenue trajectory, so it’s nearly impossible to tell how “expensive” the stock is from a long-term perspective after its massive first-half run.