An ex-Russian Stock Resumes Trading: an AI Opportunity?

Reborn, this stock could turn out into a profitable AI investment (4-min read / free)

Not going to lie, I was very surprised and almost fell from my chair when I received this notification in relation to trading resuming of Yandex (YNDX) now renamed Nebius Group (NBIS):

Did I miss the peace announcement between Putin and Zelenskyy?

I owned a couple of Russian stocks in my private portfolio prior to the invasion of Ukraine, namely Evraz, Sberbank and Yandex. They were cheap stocks of great businesses. But then Putin decided the unthinkable and I made the mistake as an investor and amateur of geopolitics to not take the U.S.’ warnings seriously that a full-scale invasion was underway.

To be fair, it was hard to imagine the invasion was actually going to happen. I lived in Russia for two years and my wife’s family is Russian, not too far from the Ukrainian border and they were used to go Ukraine often. We also have access to Russian media. And despite all of these factors, we just couldn’t and still can’t wrap our heads around any possible benefit for anybody in this conflict.

But that’s a story for another time.

So what happened with Yandex?

The founder and CEO of Nebius Group, Arkady Volozh, Russian oligarch, has been vocal in opposing the invasion of Ukraine since the beginning. Following his convictions, he proceed to divest all the Russian assets (which was the core of the Yandex business), delist from the Moscow stock exchange and stay listed on the Nasdaq despite the trading halt.

It sold its Yandex business (often labelled “Russia’s Google”) at a valuation of $5.4 bn to a consortium of Russian buyers. Not much is left of the previous business as Russian revenue was the majority. Arkady Volozh which is great news from my perspective.

Now, Nebius is a promising AI-focused business in AI cloud computing and data center.

Arkady Volozh (left) condemned Russia’s war in Ukraine led by Putin (right)

Key Points and Outlook

🟢 Nasdaq listed (access to capital), 850 tech specialists, CEO is a founder with a successful track record and the company has no Russian assets;

🟢 GPU-as-a-service and AI Cloud has a TAM¹ of $260 bn by 2030 (+35% CAGR) according to Nebius;

🟢 The company now sits on $2.3 bn of cash and has virtually no debt;

🟢 Revenue grew 1.7x in 3Q24 with core Nebius business growing almost three-fold:

Nebius, Investor Relations

🟢 Plan to spend between $600m and $1.5bn on capex, primarily on the core Nebius business (GPUs) to increase capacity;

🟢 Revenue to grow by 3-4x to $500-700m based on assumed capacity expansion, primarily driven by Nebius core business which should achieve ARR of $500m to $1bn by the end of 2025;

🟢 Expectation of positive on adj. EBITDA during 2025;

🟢 The stock is trading at an attractive valuation: the company’s market cap stands at $3.89 bn and trades at $19.57 per share. With $2.3 bn in cash, the potential of the company is trading very cheap and the stock has potential for at least x10 within 5 years.

Bottom Line

With the TAM, recent business growth, the shareholder-friendly management and the business plan in mind, the stock is a (speculative) no-brainer to own as a small portion of a diversified or technology-oriented portfolio to benefit from potential AI growth in Europe and North America.

In my opinion, the stock is an opportunity to invest in a fast-growing tech company in the AI segment and you might well regret not having considered this investment opportunity.

What do you think? Let me know in the comments and I truly hope you found this useful! 💚🙏

Etcaetera

1. Total Addressable Market.