Nebius Group (NASDAQ: NBIS) shares surged 8.56% in pre-market trading on Monday, continuing its impressive growth trajectory fueled by recent high-profile AI infrastructure agreements with tech giants Microsoft and Meta. The stock's remarkable performance comes amid growing investor optimism about the company's future prospects and potential undervaluation.

The recent surge follows a stellar year-to-date performance, with Nebius's stock price having climbed an impressive 173% despite experiencing some volatility. Analysts are particularly bullish on the company's outlook, with some suggesting that Nebius may be significantly undervalued. The most popular narrative indicates that the stock could be trading at a 49.8% discount to its fair value, implying substantial upside potential.

Driving this positive sentiment are Nebius's recent landmark multi-billion dollar contract with Microsoft and strong reliability metrics, which have led to the company selling out much of its available capacity for upcoming quarters. This success is expected to support robust utilization and pricing power, potentially leading to accelerated revenue growth and expanded profit margins over the next three years. However, investors should remain cautious of risks such as fierce competition and increasing regulatory pressures that could impact Nebius's growth trajectory.