1 Nvidia-Backed Artificial Intelligence (AI) Stock to Buy Hand Over Fist in 2025 (Hint: It's Not SoundHound AI)

Generally speaking, when businesses generate excess profits, they may choose to invest in areas such as research and development (R&D), bolster marketing budgets, or increase hiring efforts in certain departments. However, from time to time, a company may invest in other businesses and acquire a small equity stake.

In 2024, a 13F filing revealed that semiconductor giant Nvidia has ownership positions in six publicly traded companies -- Applied Digital, Arm Holdings, Nano-X Imaging, Recursion Pharmaceuticals, Serve Robotics, and SoundHound AI.

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Within this portfolio, none has gained more attention than SoundHound. Over the last 12 months, shares of the voice-recognition artificial intelligence (AI) company have soared by 950%. Without a doubt, SoundHound AI is a tempting opportunity for AI investors.

Nevertheless, I'd caution against buying a stock with this magnitude of momentum and instead recommend seeking out alternative ideas. Recently, a company called Nebius Group (NASDAQ: NBIS) came to my attention. The main reason I discovered the company? Because Nvidia has an investment in the business.

Below, I'll explain how Nebius and Nvidia are working together and make the case for why this under-the-radar AI stock could be a lucrative opportunity in 2025 and beyond.

Nebius has an interesting history

I wouldn't be surprised if you've never heard of Nebius. However, you might be familiar with Yandex, a company Nebius was affiliated with previously.

Yandex is a Russian-based internet conglomerate, similar to what Alphabet's Google is for the U.S. and many Western nations. Following Russia's invasion of Ukraine in February 2022, the U.S. and European Union imposed a number of sanctions on Russia, many of which were aimed at limiting the country's ability to conduct business with other nations.

In response to these sanctions, Yandex completed a complicated transaction through which it effectively divested its non-Russian assets. As a result, Nebius (which is based in Amsterdam) became an independent entity and listed on the Nasdaq Stock Market back in October.

Following its listing, Nebius announced a private placement on Dec. 2. Per the transaction details, the company issued 33.3 million shares at a price of $21 each, essentially raising $700 million from the likes of Nvidia and venture capital (VC) firm Accel.

Image source: Getty Images.

The company's growth is impressive, and the outlook is even better

Nebius' primary market is AI infrastructure, building graphics processing units (GPU) clusters and cloud-based platforms. However, the company also operates in other areas, including generative AI, autonomous driving, and technology-based education, through its subsidiaries Toloka, Avride, and TripleTen.

This past October, Nebius reported financials for the third quarter. Revenue increased by 766% year over year to $43.3 million -- with the AI infrastructure business comprising approximately two-thirds of total sales.

Of note, Nebius' cloud business rose almost threefold quarter over quarter and is now operating at an annualized run rate of $120 million. While these numbers may appear a tad small, it's the company's forward guidance that excites me most.

Following the news of its capital raise featuring Nvidia, Nebius' management is projecting the company's annual recurring revenue (ARR) run rate to reach up to $1 billion by the end of 2025.

While this represents a nearly tenfold increase from current levels, keep in mind that liquidity is not an issue for Nebius -- which boasted $2.3 billion of cash and equivalents on the balance sheet as of Sept. 30.

Furthermore, with more than $1 trillion projected to be spent on AI infrastructure in the near term and Nebius' importance in Nvidia's ongoing Blackwell GPU roll-out, I think the company is subtly positioned to have a monster year.

Is Nebius stock a buy in 2025?

Given its limited trading history, investors may understandably have some trepidation scooping up shares in a relatively unknown AI stock. But right now, Nebius' share price of $31 is pretty close to the middle of its high and low points since listing on the Nasdaq a few months ago.

The company has taken proper measures to ensure adequate financial horsepower to meet its near-term goals -- including a $1 billion data center expansion across Paris and Finland, fueled by ongoing demand for Nvidia GPU clusters.

To me, the real lucrative opportunity with Nebius revolves around whether the company can parlay its work with Nvidia by forming partnerships with other large chip players, such as Advanced Micro Devices, and working more closely with cloud hyperscalers, such as Oracle, Microsoft, Amazon, and Alphabet.

I think Nebius' current roadmap is compelling enough for AI investors to consider a position in their portfolio. The company's international presence provides an extra layer of diversification, and its ties to Nvidia certainly don't hurt.

At the end of the day, I think Nebius is one to watch throughout 2025 and could make a great opportunity for patient investors.

Should you invest $1,000 in Nebius Group right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Microsoft, Nebius Group, Nvidia, Oracle, and Serve Robotics. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.