Northern Data shares rise as CG Capital Markets initiates coverage on stock 'buy'

Investing.com -- Shares of Northern Data AG (ETR:NB2 ) climbed over 2% on Thursday after CG Capital Markets initiated coverage of the stock with a "buy" rating, citing growth potential in the company's AI-driven compute and data center infrastructure operations. 

Analysts at CG Capital Markets set a price target of €60, reflecting optimism about Northern Data's ability to capitalize on the burgeoning demand for high-performance computing and generative AI services.

The note flagged Northern Data's rapid transformation from its roots in Bitcoin mining to its current focus on AI infrastructure, which positions the company as a key player in Europe’s growing AI ecosystem. 

The brokerage’s Taiga Cloud division, in particular, is expected to drive substantial revenue growth, with projections of nearly €400-440 million in 2025, making up over 75% of the group's total revenue. 

This growth is underpinned by the deployment of high-end NVIDIA (NASDAQ:NVDA ) GPUs and a focus on energy-efficient, scalable infrastructure.

Analysts also noted that Northern Data's potential divestiture of its Peak Mining division could further streamline operations and provide additional capital to expand its AI-focused data center footprint. 

This shift aligns with the company’s broader goals of meeting the rising demand for AI compute capacity while maintaining a competitive edge in energy efficiency and sustainability.

Despite recent gains in its share price, CG Capital Markets believes the stock remains undervalued, citing a current enterprise value-to-sales ratio that leaves room for further appreciation as utilization rates and operational efficiencies improve in the coming quarters.

Source: Investing.com