Despite the earnings miss, DA Davidson remains bullish on AI company Nebius (NBIS.US).

DA Davidson initiates coverage of AI infrastructure company Nebius (NBIS.US) with a "buy" rating and a price target of $50. DA Davidson analyst stated that Nebius has emerged as "one of the first true alternatives" to the dominant AI compute of the hyperscale. The analyst further noted that Nebius is capitalizing on the "stiff" pricing and artificial supply constraints of platforms like Amazon AWS, Azure, and Google Cloud to offer specialized AI compute, transparent pricing, and scalable infrastructure. Based on a divisional valuation, the analyst said that assuming revenue of $750mn in 2025, the core business of Nebius is worth $6.9bn, while net cash brings enterprise value to about $12bn. Ultimately, the demand for AI compute will stabilize, but for now, the "structural positioning" of Nebius is to absorb long-term wide AI workloads. Nebius' shares have plummeted after the company reported disappointing fourth-quarter results last week. As of Monday's close, Nebius was down 9.07% to $36.22.