NB2 Will Rely On New Leadership To Unlock AI Infrastructure Upside

Analysts have lowered their price target on Northern Data from EUR 27 to EUR 15. This reflects expectations for slightly slower revenue growth and a lower future earnings multiple that together reduce the company’s assessed fair value.

Analyst Commentary

Bullish analysts acknowledge that, despite the lower target price, Northern Data retains meaningful upside potential from current trading levels if it can execute on its growth plans and achieve operating leverage in its core businesses.

They emphasize that the revised valuation still assumes continued revenue expansion and margin improvement over the medium term, albeit at a more moderate pace than previously expected.

Bullish Takeaways

• Bullish analysts highlight that the new target still prices in healthy top line growth. This reflects confidence that Northern Data can expand capacity and utilization in line with rising demand for high performance computing and digital infrastructure.
• They note that the company’s diversified business model, spanning cloud and infrastructure services, offers multiple levers for earnings growth. This supports a premium to some smaller peers even after the valuation reset.
• There is optimism that tighter capital allocation and a more disciplined investment approach could improve return on invested capital over time. This would help justify the revised fair value.
• Bullish analysts also see potential catalysts in upcoming contract wins and clearer disclosure around profitability by segment. This could reduce uncertainty and narrow the discount to long term growth prospects.

Bearish Takeaways

• Bearish analysts cite increased execution risk around scaling operations and delivering on the current project pipeline. This has led to a lower earnings multiple being applied in their models.
• They point to a slower than previously anticipated revenue ramp, indicating that some growth initiatives may take longer to translate into meaningful cash flows. This weighs on near term valuation.
• Concerns remain around volatility in underlying end markets. This could pressure pricing and utilization rates, limiting upside to consensus earnings estimates.
• Bearish analysts also flag that the reduced target price implies less margin for error. Any further delays in achieving profitability milestones are seen as likely to trigger additional downward revisions.

What's in the News

• Northern Data AG withdrew its full year 2025 earnings guidance, citing ongoing evaluation of potential strategic transactions and volatile GPU market pricing, partly offset by improved GPU capacity utilization following a Q2 technology upgrade (company guidance).
• The company highlighted stronger customer traction for its upgraded GPU infrastructure, supporting higher utilization across its AI cloud and digital infrastructure platforms (company guidance).
• John Hoffman was appointed co CEO and member of the Management Board alongside Aroosh Thillainathan. This formalizes a leadership structure focused on executing Northern Data's ambitious AI growth strategy (executive announcement).
• Hoffman's promotion builds on his prior role as Group COO, where he led day to day operations, capital markets initiatives, and strategic partnerships. In this role he helped scale one of Europe's largest AI clouds with over 22,000 GPUs under management (executive announcement).

Valuation Changes

• The Fair Value Estimate has fallen moderately, from €31.60 to about €26.33, indicating a lower assessed intrinsic value per share.
• The Discount Rate has risen slightly, from roughly 8.09% to about 8.14%, reflecting a marginally higher required return for investors.
• The Revenue Growth Assumption has been reduced modestly, from about 39.73% to roughly 37.44%, pointing to a slightly slower expected expansion pace.
• The Net Profit Margin Assumption is essentially unchanged, moving fractionally from around 14.52% to about 14.52%, implying stable long term profitability expectations.
• The Future P/E Multiple has fallen meaningfully, from approximately 32.2x to about 28.2x, signaling a lower valuation multiple applied to projected earnings.