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Bought back Nebius at open this morning ~$110.
They announced a new partnership with Nvidia for a $2B investment which dillutes even more the risks on that name. Very bullish and I couldn’t let my past mistakes affect my future returns.
The new is as important as the timing.
Nebius is the healthiest financials of the entire sector. This has always been the thesis.
They talked about 60% of their ~$18B CapEx funded, while those new $2B from Nvidia were not counted based on management's phrasing.
So ~70% funded now. Even better.
The market's worries were about financial health, and we knew/know that Nebius isn't playing the same game as others. My question for weeks was why would $Nebius be rewarded if the sector was punished?
That might be changing.
Oracle risk pricing seems to be finished after a ~60% drop as their last earnings saw lots of net inflows, up 8.5% post-earnings.
Why?
Because they are starting to show the Street they might pull their massive debt off. They are showing that their gamble is yielding results. 243% AI cloud revenue growth, fully booked, growing demand, sky-high RPOs, high margins and no CapEx raised.
And that's only half of the story.
Its biggest client, OpenAI, confirmed closing a new $110B financing round, which will help pay those famous bills.
The appetite is still here and still strong, the market has punished Oracle enough. The risk is priced in while the opportunity is growing.
This could be enough to reignite demand for the AI compute sector although all risks aren't gone. But at today's valuation with such an healthy sector, the R/R is shifting.
And who's a better play than the healthiest and fastest-growing player?
