Meet this new AI stock that could become Wall Street’s darling in 2025. It enjoys full support from Nvidia and is trading at a huge bargain price.

Many stocks performed well in 2024, but none better than those powered by artificial intelligence (AI). Technology has fueled this year’s bull market, with a few dozen stocks driving it S&P 500 (SNPINDEX: ^GSPC) an increase of around 27.5% (as of December 26th).

After such a phenomenal run, many popular AI names are expensive, and investors are betting that these companies will continue to grow quickly and their markets will only get bigger. A good AI play trading at a reasonable multiple is a rarity these days.

However, a new AI stock hit the Nasdaq just a few weeks ago and could become Wall Street’s darling in 2025. Better yet, it doesn’t trade at an astronomical valuation.

AI infrastructure company Nebius group (NASDAQ:NBIS) came back into the mix a few months ago when the company rejoined the Nasdaq stock exchange after a three-year hiatus. The Russian company Yandex previously owned Nebius. After the Russian invasion of Ukraine, the US imposed sanctions on companies linked to Russia. However, Yandex spun off its international assets in a $5.4 billion deal earlier this year.

Four AI companies have spun off from Yandex and merged into Amsterdam-based Nebius, including cloud, data labeling, edtech and autonomous vehicles. Nebius essentially offers AI-as-a-service, providing companies and developers building AI models with access to graphics processing unit (GPU) clusters and a cloud platform.

Building AI internally is expensive, but it is becoming a technology that most companies cannot ignore if they want to stay relatively. For example, ServiceNow used Nebius to increase the throughput of its conversational chatbot from 400 assessment tasks per week to up to 3,000 tasks per day.

Nebius received major support when it closed $700 million in private financing involving major venture capital firm Accel and AI Chip King Nvidia. Nebius has a special partnership with Nvidia and its website states that its customers will be the first to access Nvidia’s new Blackwell chips. There has already been some excitement surrounding the stock. Nebius returned to the Nasdaq at $20 in late October and shares have risen over 41% since then.

Nebius received another major endorsement from Andrew Left of Citron Research, who said that Wall Street has not yet understood Nebius’ appeal. No analysts cover the stock, which isn’t a big surprise since it only returned to the Nasdaq a few months ago, and it can take a long time for analysts to prepare and publish an introductory report.

The company’s financials are attractive. In the most recent quarter, Nebius increased revenue by 766% year-over-year and reduced its losses by 45%. Nebius also has nearly $2.3 billion in cash and cash equivalents and very little debt. The company is investing $1 billion in GPU clusters in Paris and is also significantly expanding its data center in Finland. Management expects the company’s annual revenue to grow to $750 billion to $1 billion by the end of 2025.

Nvidia shares are trading at 47 times forward earnings, which isn’t exactly unique in the AI industry these days. While Nebius is not a competitor and uses Nvidia’s chips, the company is expected to become profitable next year, trading below eight times expected earnings.

Given the forecast sales and profit growth and the growing market, this is a bargain. Left compares Nebius to Coreweave, a similar AI infrastructure company that is rumored to soon go public at a valuation of $35 billion. Nebius currently has a market capitalization of around $6.7 billion.

Coreweave’s official IPO announcement and subsequent registration statement could help better define the market for Nebius. Nebius is likely to continue to be difficult for investors due to the geopolitical events of the last few years and its ties to Russia. However, investments from Accel and Nvidia are an important sign of legitimacy, and it’s hard to find a quality name like Nebius trading at such low valuations.

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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, Nvidia, and ServiceNow. The Motley Fool has a disclosure policy.

Meet this new AI stock that could become Wall Street’s darling in 2025. It enjoys full support from Nvidia and is trading at a huge bargain price. was originally published by The Motley Fool