Tevis: Why Nebius Is Still His Top Position

I'd like to actually rotate right into that. I think there's some connectivity in here of the AI trade as well. Nebius has become a pretty large portion of your portfolio. You mentioned it got all the way up to 45% of your portfolio recently and then you trimmed 10 to 20% of that position. So, maybe it's safe to say it's around 35 to 40% of the portfolio. >> It's like 25% of the portfolio now because it fell from >> You trimmed Got it. I got NFL back. >> [clears throat] >> I trimmed a quarter of the position around 240 250-ish um towards the end of June and I bought that's the capital that I used to to buy Amazon and I also bought ServiceNow. Mostly because um I mean we had run up like my Nebius cost basis was in the like $81 and so we'd run up to to almost $300 and I was just taking some profits along the way. But, Nebius is also very volatile and you're going to have aggressive portfolio swings. And that was also one that I was aggressively writing cash secured puts and and covered calls on. So, if some shares got called away from covered calls, that's fine. I just let them go. Um but yeah, still still very bullish Nebius, but now it's dropped to 25% of my portfolio um because the the stock has dropped. >> Yeah, pretty big drop and dropped a lot more today as well. For people that are looking at it, it went from it peaked right around 300 and somehow we're all the way back to 172. Uh so, that was a That was a precipitous drop here. Almost a 50% drop and the 200 SMA is still not been hit. That's all the way down at 138. So, let's talk a little bit more about it. You know, what makes Nebius such an interesting investment to you? What is the bull thesis behind this and is there an area where you'd consider adding more? >> Yeah, I mean look, my cost basis is 80 bucks, right? So, if it were to fall to the low $100 range, I would absolutely add more. I think the deals that they have with the hyperscalers with with Meta and Microsoft, I think the they're really like positive catalysts going forward. As they service those contracts with regards to connected capacity, as the build-out continues, I think the data centers that they're expanding, they just you know, there was news that broke on X over the past week that they have new data centers like now one in Wales, one in India. They recently announced formally Spain and their data center expansion is off the charts and the company's growth rate speaks for itself. Like this is a company that is going to be super emblematic of the the macro demand for compute and that is not going to stop anytime soon. It's only going to continue. I'm in Coreweave to a smaller degree for much of the same reason, but Nebius I think is best in class with regards to how they're structuring some of these deals. And so I think they're only going to keep going higher. Now, it's it's a pretty volatile ride upwards and I don't know that everybody will be you know, willing to to take to go on that trip, let's say, cuz it's a roller coaster in many cases, but from an execution perspective with regards to what the company has coming up, like this upcoming quarter they should be providing some commentary on 2027 demand. I mean, they're sold out all throughout 2026 already and they're right now taking orders for 2027. Like Mark Bardgett ski, their CRO, said there's four customers for every you know, for every like megawatt that they bring online essentially. So the company is completely sold out and they're growing as fast as possible. So I want to be taking a big bet behind them. And yeah, like I know these numbers make it seem as though this is irrational irrationally exuberant if I'm, you know, over a quarter of my portfolio in Nebius, but don't forget that my cost basis in Nebius was originally like a, you know, a a 10 to 12% position. >> Well, well, let's take a look for a second then at the Nebius earnings since you did reference those and I think that they are super impressive. I'm just pulling this up on my screen here. You can see just how much this has grown, right? If we go back to Q3 of 2024 and I actually was talking about this a little earlier today as well, but 43.3 million now, 400 million. >> Yeah. >> Pretty crazy to see that basically 10x. Now, the stock has 10x as well, you know, in that time period. I'm pretty sure it's like essentially right around there. And then projections here to move up to 576 million and then all the way up to almost a billion dollars in revenue at 937. And so this is still pretty substantial jumps that people are estimating here. Is there anything else, you know, outside of the earnings and the numbers that continue to make you earnings numbers and selling out all of their capacity that makes you bullish on them? >> I mean, yeah, sure, we could talk about the management and the the pedigree there, but I don't even think it needs to be more complicated than that, right? If you think about what they have, the 27 billion dollar you know, deal with Meta, the 15 billion dollar backstop essentially that they can resell higher to to somebody else, the 17.4 billion dollar I think it is deal with Microsoft and just their ARR guidance. I mean, 7 to 9 billion is absolutely going to get raised again this year. I'd be willing to go out on a limb to say that over the next, you know, two quarters they're going to come in higher than 7 to 9 billion. And next year it's going to be much higher than that. I mean, they're raising their capex for a reason, right? They raised it from 16 to 20 billion in capex to 20 to 25 billion in capex. So, they're fully investing in scaling out the offering even further and that's going to pay dividends down the line because they have connections to all of these companies, Nvidia, but also all the major hyperscalers as well. They see the demand, and it's not subsiding anytime soon. I mean, uh Arkady, the CEO, was asked on a recent earnings call like what I mean, he's asked every earnings call about the demand profile, but in this most recent one, he said, "Look, we don't see demand subsiding even in 2027. We can talk about 2028 what that demand profile looks like, but these guys are very soon going to be sold out for 2027 as well. Like they're already starting to book deals in 2027 from data centers that are not even built yet." >> Yeah, it's crazy. >> It doesn't need to be more complicated than that. >> So, what's the, you know, potential bear case? Like being aware of it and trusting consumer to verify, what do you think is drawing it down? >> So, I think potential bear case Well, okay. I mean, Nebia sold off on this Meta news. So, Meta announced that if they have any excess capacity, they're going to sell it, which I think is kind of laughable because Meta also did a what, $10 billion investment in Alberta. They're also increasing their investments in I think it was Louisiana this week. They announced they're not going to have any excess capacity. They're it's just it's not going to happen, and Meta's really been I mean, we could talk about Meta and why that sold off, but they have had some dark clouds, let's say, from a market sentiment perspective. So, they need a small boost, especially because they're increasing their CapEx. They're going to be increasing it again, um and the bear case for Nebia is if these types of things keep happening. Like if the Metas of the world come out, or if the Microsofts of the world come out and say, "Hey, we're actually going to be fully vertically integrated from the AI perspective, and we're going to be having our own data centers, and we're not going to need a Nebia or a Coreweave in the future. People could argue that. So, that's number one. Is if your customers turn into competitors. Sure. Number two is if the floor drops from a macro demand perspective, right? If the demand across the board for AI falls. Why would it fall? Because people don't see the ROI that AI would provide. It's maybe maybe, you know, more hyped up than what it actually proves out to be. And the CapEx is not proven out. And as a result, next year they're going to have less CapEx. And if there's less CapEx, well, all of a sudden there's less demand for Nebius uh offerings, right? I don't think either of those two things are going to happen. And besides, I think that even if we see the first inklings of these things, these are like for 2028, 2029 and beyond that we're going to see it. Like Meta's Louisiana center, that's not even finished until 2032. Like, what are we talking about here? We get an announcement that Nebius sells off what? Like, 15% on the day for something that's going to happen what? 6 years from now? It's just completely unrealistic, but I think that's where we are in this hype cycle, let's call it. A lot of these data center names have gone from fairly complete anonymity to now exploding in the stock price. And every little thing, they're on a hair hair trigger, right? Like, every little thing sets them off up or down. But, on the flip side, I think there's also a lot of customers that Nebius could potentially have that they don't have announced just yet. If Anthropic drops, if Google drops, if Amazon drops, like, we're going much higher than we are right now. And we have earnings coming up, so I think it's definitely a possibility for somebody to be announced in a big way. Similar to how we jumped what? 20-something percent when Meta when Microsoft dropped. And we also got the Meta announcements right on earnings, two earnings ago, I think it was. Anyways, that's kind of like the bear case and then the counter to the bear case in a nutshell. >> Hey there, it's Gov Blaxberg, CEO at Wolf, and I'm so excited to see you at the Wolf Summit NYC on August 3rd. We've got the best names coming to this ranging from Peter Tuchman from the New York Stock Exchange to Vishal >> [music] >> from Stock Talk Weekly and so many other amazing traders, investors, educators throughout the day. It's going to be in Manhattan. We've got food planned for everyone, breakout sessions, and some exciting activities plus plenty of merch and giveaways. [music] Grab your ticket now. 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