Selloff or Market Correction? Either Way, Here's What to Do NextSee Overvalued Stocks

Former Yandex chief Volozh returns with AI infrastructure venture after Russia split

Published 07/16/2024, 06:14 AM
Updated 07/16/2024, 01:16 PM
© Reuters. File photo: Arkady Volozh, Co-Founder and Chief Executive Officer of Yandex Group of Companies, attends a session of the St. Petersburg International Economic Forum (SPIEF), Russia June 7, 2019. REUTERS/Maxim Shemetov/File photo
MSFT
-
GOOGL
-
AMZN
-
NVDA
-
NBIS
-

By Alexander Marrow

(Reuters) - Freed from its ties to Russia, newly unveiled Dutch firm Nebius hopes to help lead the great drive to build the infrastructure underpinning artificial intelligence, founder Arkady Volozh, who previously set up Russian tech giant Yandex (NASDAQ:YNDX), told Reuters.

A Russian consortium of buyers on Monday finalised a $5.4-billion cash and shares deal to acquire Yandex's Russia-based assets, which had been held through Nasdaq-listed Dutch parent Yandex NV (YNV), the largest corporate exit since Russia's invasion of Ukraine in February 2022, albeit at a hefty discount.

The deal marked the end of foreign ownership in Russia's leading technology firm, sharply raising the potential for Kremlin oversight of Russia's internet space. But it also released YNV - now rebranding to Nebius Group - from its Russian shackles, enabling it to pursue development elsewhere.

Volozh, too, is unbound. Personal EU sanctions imposed in 2022 that led him to step down as Yandex CEO, were lifted in March.

"It's good to be free, it's even better to be free with a couple of billion dollars to build something," Volozh told Reuters in his first public comments since an anti-war outburst threatened to derail the whole exit deal in August last year.

What Volozh wants to build is infrastructure based on Nebius' cloud platform to service the rapidly growing global AI industry, including large-scale GPU (graphics processing unit) clusters, cloud platforms and tools and services for developers.

"We hope Nebius will become one of the largest AI infrastructure companies in the world, certainly in Europe," Volozh said. "We understand that something serious is coming, which probably comes once in a generation, like the internet in the 1990s."

Volozh would know, having launched Yandex in the dotcom boom, eventually listing on Nasdaq and at one point reaching a valuation as high as $30 billion.

RIDING THE AI WAVE

AI infrastructure bets have fuelled a rally this year in the share prices of AI's big three players, Alphabet (NASDAQ:GOOGL), Amazon.com (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT).

Nebius, which has inherited YNV's Nasdaq listing, hopes to return to trading soon following a long suspension over its Russian business, and thinks it could be the only publicly traded stock in AI infrastructure, outside Big Tech.

Nebius, which owns a data centre in Finland and designs hardware in-house with more than 1,000 engineers plucked from Russia as the war unfolded, hopes to break even in several months and then grow on the back of huge demand.

"It's a supply market now, whatever you build is pre-ordered for months in advance," Volozh said. "If we can ride this wave it's going to be a good ride."

Despite giving up its Russian business in a cut-price deal, Nebius has some free cash flow to play with, although part of the deal's proceeds will be used to buy back shares from the many investors still holding untradable Nasdaq stock.

"Infrastructure is a very capital-intensive game," Volozh said. "We are looking at billions of dollars of investments, part will be financed from our funds, part from external funding (debt or equity)."

The plan is to build hundreds of megawatts of capacity and triple the Finland data centre's capacity over the next year, Volozh said.

Nebius has good access to GPUs thanks to a long-term relationship with Nvidia (NASDAQ:NVDA) and while the big players use Nvidia chips to build their own models, Nebius offers a platform to smaller players.

Convincing investors of its prospects may be the next challenge, especially should trading on Nasdaq resume, which Volozh hopes could happen as soon as September.

© Reuters. FILE PHOTO: Yandex founder and CEO Arkady Volozh (front, 2nd R) celebrates as Yandex is listed on the Nasdaq exchange during their IPO at the Nasdaq market site in New York May 24, 2011.  REUTERS/Mike Segar/File Photo

Mindful that Nebius is a completely different company to Yandex, Volozh said it was difficult to speak about any target share price and said there would be no hard feelings should investors choose to part ways.

"If someone wants to leave the train now while we are still in the station, they are welcome to," he said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.