What if I told you that one of the top-performing artificial intelligence (AI) stocks last year wasn’t one of the so-called “Magnificent Seven” tech giants? You might immediately think I’m referencing Palantir Technologies, which saw a remarkable 340% return in 2024. However, I’m actually highlighting a different company, one that is still considerably smaller than those industry heavyweights. In 2024, shares of SoundHound AI, a voice-recognition software developer, experienced an 836% surge.
Perhaps the most significant driver behind that impressive rise was SoundHound AI’s connection to Nvidia. Early in 2024, a 13F filing from Nvidia revealed the chipmaker’s equity stake in SoundHound AI. Unsurprisingly, this news prompted a rush of investors to buy the stock. As more details emerged, however, investors learned that Nvidia had actually made its initial investment in SoundHound AI years earlier, when the company was still private. Furthermore, that investment’s size wasn’t particularly substantial for a company of Nvidia’s scale. In other words, the news wasn’t entirely new, and Nvidia might not have had a significant strategic interest in SoundHound AI. This recognition started to temper investors’ enthusiasm. Finally, the most recent 13F filings showed that Nvidia had completely divested its position in SoundHound AI by the fourth quarter of 2024. But the chipmaker has a new addition to its portfolio, and this one could be worth watching this year.
Nvidia’s New Investment to Watch
Late in 2024, the Russian internet conglomerate Yandex separated itself from several subsidiaries. One of these spin-offs is Nebius Group (NBIS 9.86%), a Dutch data center operation in which Nvidia has taken a stake. Nebius specializes in equipping data centers with architectures for AI chipware. Currently, the company is working on setting up facilities in France, Finland, Iceland, Kansas City, and New Jersey with Nvidia’s new Blackwell GPU chipsets. Given the increasing levels of investment in AI infrastructure, I am cautiously optimistic that Nebius is well-positioned to expand its presence across both Europe and the U.S. markets.
Comparing Nebius to Another High-Growth Company
As I noted in an article in late February, CoreWeave and Nebius are similar companies. At the time, there were rumors that CoreWeave was preparing for an initial public offering (IPO). Those rumors proved to be true: The company recently filed its S-1, making far more detailed financial information public.
In 2024, CoreWeave generated $1.9 billion in revenue, a 736% increase from 2023. The company also reported more than $15 billion in remaining performance obligations (RPO). While this all looks impressive, investing in CoreWeave comes with its own set of risks. More than three-quarters of its revenue comes from only two customers. Also, the company reported a net loss of $863 million last year. Nevertheless, CoreWeave seeks a valuation of roughly $35 billion in its IPO. If this target is reached, CoreWeave would begin trading at a price-to-sales ratio of about 17.5.
Why Nebius Stock Could Skyrocket in 2025
I believe the market is assigning premium multiples to many companies involved with AI, in some form or fashion. Moreover, AI infrastructure players that work with cloud hyperscalers and GPU developers are popular with investors. These dynamics lead me to believe CoreWeave could see significant activity around its IPO, despite its high degree of customer concentration risk and its rising losses. After all, the AI trend’s biggest beneficiary, Nvidia, also has significant customer concentration, but that hasn’t stopped investors from flocking to the stock over the last two years.
A successful IPO for CoreWeave would also benefit Nebius, as it would likely lead more investors to seek out similar businesses that have yet to gain widespread attention—much like the situation SoundHound AI was in before its connection with Nvidia became public. Nebius offers clear strategic value to Nvidia, which contrasts with SoundHound AI’s previous role. Considering the essential role Nebius plays in the Blackwell rollout, I wouldn’t be surprised if Nvidia strengthens its relationship with the company.
For all these reasons, I expect Nebius stock to see some exciting action throughout 2025 as demand for AI infrastructure increases and Nvidia continues to dominate the GPU landscape.
