Nebius Group NV - Shs Class-A-

Nebius moved sharply higher after announcing a multi-year AI infrastructure agreement with Microsoft with a contract value of $19+ billion that effectively exceeded Nebius’ pre-announcement market capitalization. The more important point isn’t the size of the headline win but the character of the revenue, which provides significant visibility into Nebius’ future earnings power. The structure of this tie-up is closer to an AI infrastructure off-take agreement than a typical cloud contract: long-dated, effectively take-or-pay, and financeable against Microsoft’s AAA credit profile. Even after the move in the share price in Q3, we believe NBIS still trades at an unsustainable discount to the earnings power implied by its contracted power pipeline and the quality of its counterparties.

Nebius has emerged as a significant player in the AI infrastructure power supply chain, particularly following its announced deal with Microsoft. This partnership positions Nebius favorably within the context of the ongoing AI capex cycle, which has seen a repricing of companies involved in high-performance computing and data centers. The recent performance of Nebius, alongside other companies in this sector, indicates strong market confidence and potential for growth as demand for reliable power access and data center capabilities continues to rise.

In Q2 2025, Heartwood rotated capital into Nebius (NBIS) at a cost basis of $31.35, with shares currently trading for $121.80. The resulting 288% gain has not only fully offset our entire DNUT loss, but has generated incremental outperformance for the fund. This trade now stands as Heartwood’s best ever. We believe Nebius is well-positioned to benefit from the ongoing AI-driven bull market, which remains in its long-term infancy, as it aligns with our focus on companies with strong long-run prospects.

The letter discusses Nebius in the context of Nvidia's investments and the broader AI infrastructure landscape. However, it does not provide a specific investment thesis or directional argument regarding Nebius itself.