In a stunning turn of events, the Nasdaq Composite has completely cratered and is now down over 13% since Feb. 18 (as of this writing). The culprit has been a combination of U.S. President Donald Trump's tariffs and weak economic data that could be pointing to a recession, or perhaps stagflation.
While market sell-offs are never fun and can be scary, they have historically created prime opportunities to purchase stocks at a discount. Here's one magnificent stock that is a bargain buy right now.
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A stock that wasn't expensive to begin with
The market previously reached dizzying high levels, as the artificial intelligence (AI) trade led investors to throw valuations aside and buy like there was no tomorrow. But the two-year-plus bull market eventually came to a screeching halt thanks to the emergence of DeepSeek, weak economic data, and Trump's tariffs. Stocks trading at high valuations were vulnerable to pullbacks, and the sell-off eventually spread to the entire market.
While one could make the case for buying the dip on a whole range of stocks, if you saw a stock trading at a discount a month or two ago, that stock is certainly on sale now. One that falls into this bucket is the artificial intelligence infrastructure company Nebius Group (NASDAQ: NBIS). Nebius has been on an interesting ride the last few years, but it looks intriguing for a number of different reasons.
First, Nebius is part of the AI trade, which is a draw in today's market. There is a lot we still don't know about AI, but it seems like the innovative technology is going to affect the world in a significant way, although the timeline isn't exactly clear. Many of the assets owned by Nebius previously belonged to the Russian search company Yandex.
Yandex was delisted from the Nasdaq about three years ago when Russia invaded Ukraine and the U.S. imposed sweeping sanctions on Russia. Through a long and complex process, Yandex split off four business divisions -- cloud, data labeling, edtech, and autonomous vehicles -- in a $5.4 billion deal that would ultimately form Nebius. Last October, Nebius rejoined the Nasdaq. In December, it announced a $700 million private round of financing from a group of investors led by the dominant AI chip company Nvidia.
Nebius' main business is building out data centers with clusters of graphics processing units (GPUs) specifically designed for customers looking to build, run, and deploy AI workloads. Nebius has a partnership with Nvidia and offers its latest Blackwell chip technology. Options like Nebius are highly desirable for companies that are looking to deploy AI but that don't want to have to invest in and build the necessary infrastructure on their own.
The company also has a clean balance sheet with roughly $2.45 billion of cash and equivalents and very little debt. In 2024, Nebius grew revenue 462% from 2023. The company is projecting to exit 2025 with an annualized revenue run rate of between $750 million and $1 billion, according to management, after only generating about $118 million in 2024.
Look to Coreweave
Recently, another company that runs data centers specifically for AI filed its registration statement to go public. Coreweave is seeking to raise $4 billion in an initial public offering that would value the company at about $35 billion. The company is ahead of Nebius in that it generated over $1.9 billion in revenue in 2024, along with an operating profit of over $324 million. Coreweave's financials also showed that investing in capital expenditures paid dividends in 2024.
Nebius has also been investing in its infrastructure by updating and increasing capacity at its data centers in Finland and the U.S. If the company achieves a $1 billion revenue run rate by the end of 2025, that would put it on a similar revenue growth trajectory to Coreweave in 2024.
Meanwhile, the stock trades at a roughly $6.1 billion market cap, which means there is a significant gap between Nebius and Coreweave and significant upside potential for this magnificent stock.
Should you invest $1,000 in Nebius Group right now?
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nebius Group and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
