Nebius Surges 220% as Big Short Investor Takes Opposing Bet
Nebius, a Dutch-founded neo-cloud company established by Israeli entrepreneurs, has rapidly emerged as a leading player in the fast-growing artificial intelligence infrastructure market. Founded in 2024 by Arkady Volozh, the founder of Yandex, along with former executives Roman Cherny and Elena Bonina, the company operates development centers in Amsterdam and Tel Aviv and employs 1,540 people. Nebius builds and leases AI-focused server farms across the U.S., supplying major cloud providers like Meta and Microsoft, as well as AI service users including Shopify and Israeli firms such as Weka and Decart, the latter potentially being acquired by Anthropic soon.
In recent months, Nebius has outpaced competitors like CoreWeave, which also received a $2 billion investment from Nvidia earlier this year. Nebius’s stock has soared 220% in 2024, reaching a market value of approximately $68 billion on Nasdaq, compared to CoreWeave’s $58 billion valuation and 48% stock increase. Nvidia also invested $2 billion in Nebius for an 8% stake. In Q2 2024, Nebius reported revenues of $582 million, a 454% year-over-year increase, and an annual recurring revenue run rate of $9 billion, far exceeding prior forecasts. The company secured four major contracts averaging over $1 billion each, including deals with Cohere and Reflection, with 70% of these contracts prepaid at 50-60% of related server farm construction costs. Its AI business EBITDA margin rose to 50% from 45% the previous year.
Despite these strong results, investor Michael Burry, known for predicting the 2008 subprime crisis, has taken a significant short position against Nebius, betting on a stock decline from its current $268 to $212. Burry points to concerns over Nebius’s high depreciation expenses, which exceed EBITDA, and the company’s extension of hardware depreciation from four to five years, which he argues underestimates true costs given the shorter lifespan of GPUs. He also highlights Nebius’s dependence on expensive Nvidia hardware and vulnerability to demand slowdowns. Nebius’s stock remains highly volatile, having dropped 45% earlier this year and trading at a high price-to-earnings multiple of 57, compared to CoreWeave’s multiple of 13.
Nebius’s rapid ascent reflects the growing importance of neo-cloud infrastructure in AI, but the contrasting views between bullish analysts and cautious short sellers underscore the risks in this emerging market.