Truist Securities has launched research coverage on AI compute leasing company Nebius (NBIS.US) with a "Buy" rating and a price target of $355. This endorsement comes from the bank's assessment that the firm's engineering talent and the economics of new contracts could boost both pricing power and revenue growth.
Analyst Arvind Ramnani detailed the investment thesis in a report published Wednesday, framing Nebius as a unique avenue for investors to gain exposure to an AI-native hyperscaler that is still constructing its infrastructure. The report suggests that market consensus estimates for 2027 Annual Recurring Revenue may be overly conservative, especially considering recent pricing benchmarks. Current contracts spanning one-to-three years are priced between $20 million and $25 million per megawatt, while short-term agreements command $40 million to $50 million per megawatt. Based on these figures, Ramnani's team projects 2027 ARR will significantly exceed current Wall Street expectations.
The outlook extends well beyond the near term, with the bank highlighting a potential annual revenue opportunity of $2.1 trillion in the cloud sector by 2030. Scarcity and favorable contractual economics are cited as key drivers that will sustain pricing momentum and revenue expansion. Furthermore, the coverage notes that Nebius has multiple pathways to achieve adjusted EBIT margins between 20-30% over the medium term.
Truist believes the company is well-positioned to capture market share from both emerging cloud providers and established hyperscalers. Ramnani pointed to a workforce of more than 850 engineers, combined with strategic mergers and acquisitions, as competitive advantages that enable the firm to move up the technology stack and seize inference workload opportunities. The analyst forecasts that inference will constitute the vast majority of AI workloads over the coming years.
The leadership background adds another layer of context to the investment story. Nebius is helmed by CEO and founder Arkady Volozh, who previously founded Yandex. Following the onset of the Russia-Ukraine conflict, Volozh divested Yandex's Russian assets and restructured the international business into the AI cloud enterprise now known as Nebius.
Broader Wall Street sentiment remains robust, with Tipranks data indicating a "Strong Buy" consensus rating for the stock. The average analyst price target stands at $306.38, which implies a 27% upside from current levels. Shares closed Wednesday's regular trading session down 1.45% at $240.35. Despite that single-session decline, the stock has surged an impressive 187% so far this year.
Comments