Many stocks performed well in 2024, but none better than those powered by artificial intelligence (AI). The technology fueled the bull market this year, with a few dozen stocks powering the S&P 500 (^GSPC -1.11%) to a roughly 27.5% gain (as of Dec. 26).

Now, after such a phenomenal run, many popular AI names are expensive, with investors betting that these companies continue to grow at high rates and that their markets only get bigger. Finding a good AI play trading at a reasonable multiple is now a rarity.

However, just a few weeks ago, a new AI stock joined the Nasdaq and could become a Wall Street darling in 2025. Better yet, it doesn't trade at an astronomic valuation.

Back in the mix

AI infrastructure company Nebius Group (NBIS -3.46%) got back in the mix a few months ago when the company rejoined the Nasdaq exchange after a three-year hiatus. The Russian company Yandex previously owned Nebius. After Russia invaded Ukraine, the U.S. imposed sanctions on companies linked to Russia. However, earlier this year, Yandex split off its international assets in a $5.4 billion deal.

Four AI businesses split off from Yandex and into the Amsterdam-based Nebius, including cloud, data labeling, edtech, and autonomous vehicles. Nebius essentially offers AI-as-a-service, providing companies and developers building AI models with access to graphics processing unit (GPU) clusters and a cloud platform.

AI is expensive to build internally, but is becoming a technology that most businesses can't ignore if they want to stay relative. For instance, ServiceNow used Nebius to increase throughput on their conversational chatbot from 400 evaluation tasks per week to as many as 3,000 tasks a day.

Nebius got a huge endorsement when it closed a $700 million private financing that included the large venture capital firm Accel and AI chip king Nvidia. Nebius has a special partnership with Nvidia, and its website says its customers will be the first to access Nvidia's new Blackwell chips. There has already been some excitement about the stock. Nebius came back onto the Nasdaq at $20 in late October, and shares are up over 41% since.

Becoming the next AI darling

Nebius got another big endorsement from Citron Research's Andrew Left, who said Wall Street has yet to catch on to Nebius' appeal. No analysts cover the stock, which isn't a huge surprise because it only returned to the Nasdaq a few months ago, and it can take analysts a long time to create and publish an initiation report.

Nebius' financials are attractive. In its most recent quarter, the company grew revenue by 766% year over year and trimmed its losses by 45%. Nebius also has nearly $2.3 billion of cash and cash equivalents and very little debt. The company is investing $1 billion in GPU clusters in Paris and also doing a major expansion to its data center in Finland. Management expects the company's annualized revenue run rate to increase to $750 million to $1 billion by the end of 2025.

Companies like Nvidia trade at 47 times forward earnings, which isn't exactly unique in AI these days. While Nebius isn't a competitor and leverages Nvidia's chips, the company is expected to turn profitable next year and trades below 8 times forward earnings.

Considering the projected growth of revenue and earnings and its growing market, this is a bargain. Left compares Nebius to Coreweave, a similar AI infrastructure company rumored to soon go public at a $35 billion valuation. Nebius has a roughly $6.7 billion market cap right now.

The official announcement of Coreweave's IPO and ensuing registration statement could help better define the market for Nebius. Nebius is also likely still tricky for investors due to all the events in recent years and its ties to Russia. However, investments from Accel and Nvidia are an important sign of legitimacy, and it's hard to find a name like Nebius trading at this kind of valuation.