Nebius Group Trade Call: High Return Potential Despite High Risk

2 months ago

Parkev Tatevosian, CFA

"for Mebius Group, for example, I've incorporated the added risk into the stock by increasing the beta by 15% which increases the weighted average cost of capital, which decreased the intrinsic value per share to $110 compared to the current market price of $85. But I still see this stock as an investment with a high return potential, but it also comes with a great deal of risk. It's on the riskiest side of the investing spectrum, so it should only be considered for those investors that are okay with extremely high risk, but with the potential of extremely high return. Now, this $109 intrinsic value is just what I believe these shares are worth today. But 10 years from now, I think these shares could be worth a lot more as this company continues to expand capacity and as the world starts to incorporate artificial intelligence."

The speaker assesses Nebius Group (NBIS) as a high-risk, high-reward investment. He highlights that after accounting for higher beta and WACC adjustments, the intrinsic value is around $110 compared to a current market price of $85, suggesting a potential undervaluation. Despite the inherent risk, he is bullish on the long-term prospects fueled by capacity expansion and AI integration over a 10-year horizon.

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