Nvidia customer’s valuation voodoo tests AI mania
The author is a Reuters Breakingviews columnist. The opinions expressed are her own. Refiles to fix typo in paragraph two.
By Yawen Chen
LONDON, July 2 (Reuters Breakingviews) -Customers of Nvidia NVDA.O are trying to steal some of the Californian chip giant’s valuation magic. That’s one way to understand the news that Germany’s $1.4 billion Northern Data NB2.DE may re-list part of its business in the United States with a possible $10 billion to $16 billion target valuation, based on banker pitches as reported by Bloomberg. If investors go along with that price tag, it’s a sign that artificial intelligence mania has reached new heights.
The Frankfurt-listed company has a knack for getting hold of Nvidia’s highly sought-after chips, partly because of its history as a cryptocurrency miner. These days, the best way to monetise super powerful chips is not to perform calculations in return for bitcoin or ether, but to rent out the computing power to AI-hungry companies. Northern Data’s new strategy, therefore, is to get its Taiga Cloud unit up to 75% of total revenue next year from 20% last year, while pushing crypto down to 20% of sales compared with 80% in 2023.
If that works, the company might hope for an AI-worthy multiple as a reward. Northern Data’s privately held U.S. peer CoreWeave, for example, recently secured a $19 billion valuation. It has about twice as many high-end Nvidia graphics processing units (GPUs) as the German group. The implied read-across may be that Northern Data’s relevant cloud unit alone should be worth just under $10 billion. The theory may be that a Nasdaq initial public offering for the AI bits of the group may help to juice that valuation even further.
There are several problems with that line of thinking. The first is that investors already implicitly attach a value for the divisions in question, and it’s nowhere near the mooted U.S. IPO price tag. Even after a roughly 20% surge on Tuesday following the Bloomberg report, Northern Data’s market value was about $1.7 billion. Berenberg analysts, which initiated their coverage of the stock in April with a “buy” rating, estimated that Taiga Cloud is worth about $2 billion, based on a discounted cash flow analysis. It’s unclear why that number should be so much higher purely by virtue of having a Nasdaq listing.
Another question is the sustainability of Northern Data’s unique edge, which consists of its access to Nvidia chips. Its AI pivot is enabled by the fact that it got access to thousands of Nvidia H100 Tensor Core GPUs last year, partly through the acquisition of a business called Damoon from stablecoin specialist Tether. That was a good deal, but investors might suspect it was a one-off. The two units that Northern Data may IPO will generate about $470 million of EBITDA in 2027, Berenberg analysts reckon. So a $16 billion enterprise value would imply a heady 34 times multiple. That sounds more like valuation voodoo than financial reality.
Follow @ywchen1 on X
CONTEXT NEWS
Northern Data is mulling an initial public offering of its combined artificial intelligence and data centre businesses on the Nasdaq as early as in the first half of next year, Bloomberg reported on July 1 citing people familiar with the matter.
The company has asked several financial advisers to pitch for a role on the float and could mandate lead banks within the coming months, the report said.
Banks have suggested valuations for the business that range from about $10 billion to $16 billion, the report also said.
Separately, Northern Data said it has purchased Nvidia’s latest H200 graphics processing units (GPUs) through a newly established partnership with IT group Supermicro, according to a statement on July 1.
The company said that its cloud computing unit, Taiga Cloud, will be the first in Europe to offer access to the H200 GPU hardware, with delivery and deployment scheduled for the fourth quarter of 2024.
Northern Data shares were up 20% to 30 euros as of 0918 GMT on July 2.
Graphic: Northern Data's fluctuating market capitalisation https://reut.rs/45Rqsmc
Editing by Liam Proud and Oliver Taslic
免责声明: XM Group仅提供在线交易平台的执行服务和访问权限，并允许个人查看和/或使用网站或网站所提供的内容，但无意进行任何更改或扩展，也不会更改或扩展其服务和访问权限。所有访问和使用权限，将受下列条款与条例约束：(i) 条款与条例；(ii) 风险提示；以及(iii) 完整免责声明。请注意，网站所提供的所有讯息，仅限一般资讯用途。此外，XM所有在线交易平台的内容并不构成，也不能被用于任何未经授权的金融市场交易邀约和/或邀请。金融市场交易对于您的投资资本含有重大风险。
所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。
本网站上由XM和第三方供应商所提供的所有内容，包括意见、新闻、研究、分析、价格、其他资讯和第三方网站链接，皆保持不变，并作为一般市场评论所提供，而非投资性建议。所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为适用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。请确保您已阅读并完全理解，XM非独立投资研究提示和风险提示相关资讯，更多详情请点击 这里。
