Nebius Emerges from Shadows: A New Era for AI Compute
After a two-year hiatus due to economic sanctions imposed in the wake of Russia’s Ukraine invasion, Nebius, formerly known as Yandex, is set to begin trading on public markets once again. The Netherlands-based company aims to become one of Europe’s leading players in the ‘GPU-as-a-service’ space, marking a significant shift in its business strategy.
A Brief History
Yandex was founded in 1997 and quickly gained recognition as the "Google of Russia" for its innovative search engine, advertising products, maps, and autonomous vehicles. The company’s parent organization, Yandex N.V., went public on the Nasdaq in 2011 and listed on the Moscow Exchange three years later. By the end of 2021, Yandex N.V.’s valuation had reached a staggering $31 billion.
However, the Russia-Ukraine conflict in 2022 led to global sanctions against companies operating in the region, including Yandex N.V. The company’s co-founder and CEO, Arkady Volozh, was forced to resign after being placed on the European Union’s sanctions list. Following his removal from the list in March 2024, Volozh returned as CEO of Nebius, a new entity formed from one of Yandex N.V.’s few remaining assets outside of Russia: a Finnish data center and AI cloud business called Nebius AI.
A New Era for Nebius
Nebius formally emerged in July, outlining its ambitious plans to become a European AI compute leader. The company’s focus on AI infrastructure aligns with the growing demand for specialized computing resources in the field. By leveraging its existing assets and expertise, Nebius aims to establish itself as a major player in this space.
The Nasdaq had initially announced plans to delist Yandex N.V. and several other Russian-affiliated companies in 2022 due to economic sanctions. However, after an appeal by Yandex N.V., the exchange agreed to maintain its listing but halted trading to sever ties with Russia. With those ties terminated earlier this year and $2 billion in the bank from selling its Russian assets, Volozh expressed his intention to continue Nebius as a public company.
"We believe our ambition is to build one of the world’s largest specialist AI infrastructure businesses," Volozh said in a statement. "This requires access to technological expertise, graphics processing units and capital. These are exactly what we have."
Nebius: A Unique Position
As a publicly traded company, Nebius offers investors an alternative to traditional U.S.-based hyperscalers like Alphabet or Microsoft. While it may seem counterintuitive for a company in the AI compute space to be listed as a startup, Nebius’s unique position allows it to leverage its public status to access capital more easily and cheaply.
A New Chapter Begins
With Class A ordinary shares set to resume trading on Monday, October 21, 2024, Nebius embarks on a new chapter in its history. The company’s success will depend on its ability to execute its ambitious plans and capitalize on the growing demand for AI infrastructure.
The Path Ahead
As Nebius navigates this uncharted territory, several factors will contribute to its success or failure:
- Access to capital: With $2 billion in reserve from selling Russian assets, Nebius has a significant war chest to invest in its growth.
- Expertise and innovation: The company’s existing assets and expertise provide a solid foundation for its AI infrastructure plans.
- Market demand: The growing need for specialized computing resources in the AI space will be critical to Nebius’s success.
Only time will tell if Nebius can overcome these challenges and emerge as a leading player in the AI compute market.
