Nebius Group N.V. (NBIS) shares climbed on reports of renewed acquisition discussions with Israeli artificial intelligence startup AI21 Labs. This development follows the collapse of earlier talks between AI21 Labs and chipmaking giant Nvidia, which had explored a potential deal valued between $2 billion and $3 billion but ultimately failed to reach an agreement. With Nvidia stepping back, Nebius has emerged as a strategic alternative buyer, reigniting a bidding narrative in the AI infrastructure space.
AI21 Labs, founded in 2017, has strategically repositioned itself toward enterprise artificial intelligence tools after winding down its consumer product, Wordtune. The company now focuses on providing language models and productivity solutions for business users, generating an estimated $50 million in annual revenue with a team of around 200 people. In January, AI21's co-founder and chairman, Amnon Shashua, confirmed the company was evaluating strategic options with multiple potential buyers.
For Nebius, acquiring AI21 Labs would mark a significant expansion into the application layer of AI, combining its existing infrastructure provisioning with enterprise software capabilities. Nebius operates compute services and develops internal model capabilities through its Nebius AI Studio platform. The company has secured major commercial relationships, including a $3 billion, five-year deal with Meta signed in late 2025 and a previous large agreement with Microsoft, underscoring strong enterprise demand.
The deal landscape is complicated by Nvidia's overlapping investments in both companies. Nvidia participated in AI21 Labs' Series C funding round and has also committed substantial capital to Nebius through direct investment and share warrants. These cross-holdings introduce complexity to valuation expectations and negotiation dynamics.
Analytically, Nebius presents a different profile compared to a larger peer like CoreWeave. While CoreWeave reported $4.92 billion in 2025 revenue with a massive $66.8 billion backlog, it carries significant debt and plans hefty capital expenditures. In contrast, Nebius reported $227.7 million in 2025 revenue but holds a strong cash position of $3.7 billion and targets an aggressive $7 to $9 billion in Annual Recurring Revenue (ARR) by the end of 2026. Wall Street maintains a Moderate Buy rating on Nebius with an average price target of $157.09, reflecting higher growth expectations for the earlier-stage company.
