This Nvidia-Backed Name Is My New Data Center Pick
As investors climb the wall of worry, I've picked up this recovering data center name with an intriguing chart.
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Inflation is running hot, and members of the American Association of Individual Investors (AAII) are the most bearish in over a year at 47%, but the market continues to rally. This is classic "climbing the wall of worry" action.
What is happening is that investors are skeptical and hesitant to buy, but when the market keeps going up anyway, they are afraid of being left behind, so they put some money to work. These inflows create more strength and suck in more skeptical investors from the sidelines. If the market doesn't care about bad news then maybe we are missing something and should be more invested.
Breadth is running two-to-one positive, with the Magnificent Seven leading with a gain of 1.6%. Small caps are lagging, but positive.
I've been complaining recently about not finding many good entry points, but I continue to dig and have found a few things of interest.
One group that has intrigued me is the data center/bitcoin miners. This group fell hard on the DeepSeek news because of concerns that less computer power would be needed for AI development. That turns out not to be the case, but the group has not recovered very well. Core Scientific CORZ and TeraWulf WULF are both still close to their 200-day simple moving averages.
One name that has recovered and has an interesting looking chart is Nebius Group, NV (NBIS).
Nebius Group is headquartered in Amsterdam and is a leading provider of AI-focused infrastructure and services. It provides GPU clusters, cloud computing services and tools for the machine learning lifecycle, including data processing, model training, fine-tuning and inference.
NBIS has several business units. Nebius AI is a cloud platform specializing in AI deployment and machine learning solutions. Toloka focuses on generative AI services, including data annotation, model training and quality assessment. Avride develops autonomous driving technologies and robotic delivery systems. TripleTen is an educational technology platform aimed at re-skilling individuals for careers in tech.
Nebius operates a large-scale data center in Finland and has expanded to the U.S. with GPU-equipped facilities in Kansas City. It plans further investments in Europe and the U.S. Nvidia NVDA and other partners have invested in NBIS.
One big fan of the stock is Citron. On December 4, 2024, Critron issued a report in which it projected NBIS to generate nearly $1 billion in revenue by 2025, largely driven by its data center infrastructure.
"This business is growing rapidly, and the recent $700 million capital raise from Nvidia and Accel Partners provides a strong financial foundation for Nebius' future growth," per the report. "While AI stocks remain volatile, the optionality in Nebius is immense. If the AI market continues to grow at its current pace, Nebius is well-positioned to capitalize, with a stock price potentially reaching $50 or more."
The is much more here, but in the short term, it is the chart that is most appealing. Earnings are due next week.
At the time of publication, TheStreet Pro Portfolio was long WULF, CORZ and NBIS.
