As the artificial intelligence (AI) revolution kicks into high gear, investors are scouring the tech landscape for the companies best positioned to capitalize on the boom. One firm attracting considerable attention is Northern Data (NB2), a leading provider of high-performance computing (HPC) solutions. In a comprehensive new report, Canaccord Genuity initiated coverage of Northern Data with a bullish outlook, setting a price target of 60 euros and giving the stock a coveted buy rating.
The optimistic assessment is based on Northern Data’s unique blend of assets and partnerships that have situated it at the forefront of the AI infrastructure arms race. As the report notes, Northern Data is essentially “building the railroad for the AI gold rush” through its Taiga Cloud business, which has emerged as a critical provider of GPU-based computing services tailored for machine learning and AI applications.
Tether Ties Provide Stability and Opportunity
One of the key factors underpinning Northern Data’s strong position is the backing of Tether, the controversial but influential stablecoin issuer. Tether owns a 52% stake in the company, providing a level of financial stability and crypto industry clout that few competitors can match. This relationship has helped Northern Data weather the recent crypto market turmoil and emerge as a resilient player in the HPC space.
Potential Peak Mining Deal to Boost Growth
Beyond its core AI infrastructure offerings, Northern Data also has a valuable card to play in the form of its Peak Mining business. The company recently announced that it is exploring a potential sale of this asset, which could unlock significant capital to fuel further expansion in the GPU data center arena. As the Canaccord report states, divesting Peak Mining would give Northern Data a war chest to invest aggressively in cutting-edge AI hardware and facilities, “meaningfully improving the company’s growth runway beyond FY25.”
Infrastructure Providers to Reap AI Rewards
Looking at the bigger picture, the Canaccord analysis underscores the tremendous opportunity ahead for infrastructure providers like Northern Data as AI adoption accelerates across industries. The insatiable demand for GPU horsepower and high-speed connectivity is expected to surge in the coming years, putting firms with established HPC assets in an enviable position. For astute investors, these “picks and shovels” plays may offer the best risk-reward balance in the AI gold rush.
Risks and Upside Remain for Northern Data
To be sure, Northern Data is not without its challenges and uncertainties. The company faces intense competition in the HPC market, and the sale of Peak Mining is far from a done deal. However, the Canaccord report argues that the current valuation still offers compelling upside for investors, as evidenced by the 74% rally in NB2 shares over the past three months. With a savvy strategy and the tailwinds of the AI megatrend at its back, Northern Data appears poised to thrive in the emerging era of intelligent computing.
“Companies like Northern Data are building the railroad for the AI gold rush… The company’s Taiga Cloud business has come online at the forefront of what is shaping up to be a generational opportunity.”
– Canaccord Genuity analysts
As the AI revolution unfolds, investors will be keeping a close eye on infrastructure leaders like Northern Data. With its unique blend of assets, partnerships, and growth potential, this rising star of the HPC world may be one of the most compelling plays in the tech sector today. For those seeking exposure to the transformative power of artificial intelligence, Northern Data is a name to watch closely in the months and years ahead.
