We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Nebius Stock Surges 110% in 6 Months: Time to Buy, Hold or Sell?
Read MoreHide Full Article
Key Takeaways
Nebius posted 454% revenue growth as its AI business drove 98% of total revenues.
Nebius signed major contracts and raised its year-end contracted power target to 5 gigawatts.
Nebius is improving profitability, but heavy capital spending and its elevated valuation pose risks.
Nebius Group N.V. (NBIS - Free Report) stock has surged 109.5% in the past six months, outperforming the Zacks Computer & Technology sector and the Zacks Internet Software Services industry’s growth of 32.5% and 25.1%, respectively. The S&P 500 composite is up 18% over the same time frame.
NBIS has also outpaced its peers, NVIDIA Corporation (NVDA - Free Report) , Microsoft Corporation (MSFT - Free Report) and CoreWeave, Inc. (CRWV - Free Report) , with NVDA up 33.2%, MSFT rising 42% and CRWV gaining 12.7% in the past six months.
Image Source: Zacks Investment Research
After its recent rally, questions remain over whether Nebius can continue its upward trajectory or if its current valuation already accounts for much of its expected growth. Evaluating the company’s growth opportunities, competitive strengths and potential risks can provide a clearer view of its future prospects.
Factors to Consider for NBIS
Nebius is benefiting from strong demand for AI infrastructure and continued expansion of its available capacity. In the second quarter, group revenues surged 454% year over year to $582 million, while the Nebius AI business grew 514% to $575 million and accounted for 98% of total revenues. Growth was supported by capacity added during the first quarter, higher utilization resulting from improved infrastructure efficiency and contributions from the asset-light business model, Token Factory and recent acquisitions. The company again sold out its available capacity as newly deployed resources were absorbed by customer demand.
Strong customer demand and favorable contract economics are also supporting Nebius’ growth prospects. During the quarter, the company signed four major agreements with Reflection, Cohere, a scaled U.S. new lab and a large U.S.-based quantitative trading firm, with the deals averaging more than $1 billion each. These midterm contracts generate yields of $20 million-$25 million per megawatt and include upfront payments covering roughly 50%-60% of associated capital expenditures. Nebius also continues to see demand for shorter-duration capacity, where it is negotiating contracts in the $40 million-$50 million-per-megawatt range and, in some cases, even higher.
Profitability is improving alongside the rapid revenue expansion. Group adjusted EBITDA reached $236 million in the second quarter, compared with a loss of $21 million a year earlier, while the adjusted EBITDA margin expanded to 41% from 32% in the first quarter. The improvement reflected higher revenues as well as early contributions from the asset-light model, Token Factory and recent acquisitions. Management also expects capacity coming online from company-owned data centers to begin supporting further margin improvement in the second half of 2027.
Image Source: Zacks Investment Research
Recently, Nebius announced the acquisition of Inferize, an inference optimization company, to strengthen the production inference capabilities of its Nebius Token Factory managed inference platform. The deal brings Inferize’s technology and systems engineering team into Token Factory.
Nebius is also expanding its capacity pipeline and diversifying the ways it can monetize that capacity. The company raised its year-end contracted power target to 5 gigawatts and expects almost all of that power to come online over the following three to three-and-a-half years. Its asset-light partnership model provides another avenue for expansion, with partners financing, building and operating facilities while Nebius contributes its full-stack platform and customer demand. In the last earnings call, the company highlighted that this structure can generate high-margin revenues while requiring minimal balance-sheet capital and could unlock additional capacity from 2027 onward.
Nebius Group N.V. Price, Consensus and EPS Surprise
However, Nebius’ rapid expansion requires substantial capital investment. Capital expenditures totaled approximately $5.7 billion in the second quarter, primarily reflecting purchases of GPUs and related hardware as well as data-center expansion, while the company continues to expect full-year 2026 capital expenditures of $20 billion-$25 billion. To support this spending, Nebius is relying on a combination of operating cash flow, customer prepayments, asset-backed financing and potentially corporate-level debt or equity-linked financing.
Investments in businesses that remain at an early stage are weighing on consolidated profitability relative to the core AI operation. Management said the difference between group adjusted EBITDA margins and those of the Nebius AI business reflects continued investments in Avride and TripleTen, both of which are still early-stage companies. Although the Nebius AI business is expected to continue generating the significant majority of group adjusted EBITDA, these investments continue to affect overall group margins.
The timing of capacity deployment also affects when additional infrastructure translates into revenues. In the last earnings call, management stated that after power is connected, Nebius must still commission the data center, build the network and clusters, deploy the platform and onboard customers before revenue generation begins, a process that can take several months.
A Look at NBIS' Valuation
In terms of price/book multiple, NBIS shares are trading at 5.69X, higher than the industry’s 3.79X. CRWV, MSFT and NVDA trade at a Price/Book of 7.98X, 8.82X and 25.14X, respectively.
Image Source: Zacks Investment Research
What to Do With NBIS Stock Now?
Nebius’ strong AI infrastructure demand, expanding capacity and improving profitability support its long-term growth prospects. However, the stock’s sharp rally and elevated valuation suggest that much of its growth potential may already be reflected in the current price.
Existing investors can hold the stock given Nebius’ strong AI infrastructure demand, expanding capacity pipeline and improving profitability. However, new investors can wait for a better entry point.
View the Zacks #1 Rank List
Image: Bigstock
Nebius Stock Surges 110% in 6 Months: Time to Buy, Hold or Sell?
Key Takeaways
Nebius Group N.V. (NBIS - Free Report) stock has surged 109.5% in the past six months, outperforming the Zacks Computer & Technology sector and the Zacks Internet Software Services industry’s growth of 32.5% and 25.1%, respectively. The S&P 500 composite is up 18% over the same time frame.
NBIS has also outpaced its peers, NVIDIA Corporation (NVDA - Free Report) , Microsoft Corporation (MSFT - Free Report) and CoreWeave, Inc. (CRWV - Free Report) , with NVDA up 33.2%, MSFT rising 42% and CRWV gaining 12.7% in the past six months.
Image Source: Zacks Investment Research
After its recent rally, questions remain over whether Nebius can continue its upward trajectory or if its current valuation already accounts for much of its expected growth. Evaluating the company’s growth opportunities, competitive strengths and potential risks can provide a clearer view of its future prospects.
Factors to Consider for NBIS
Nebius is benefiting from strong demand for AI infrastructure and continued expansion of its available capacity. In the second quarter, group revenues surged 454% year over year to $582 million, while the Nebius AI business grew 514% to $575 million and accounted for 98% of total revenues. Growth was supported by capacity added during the first quarter, higher utilization resulting from improved infrastructure efficiency and contributions from the asset-light business model, Token Factory and recent acquisitions. The company again sold out its available capacity as newly deployed resources were absorbed by customer demand.
Strong customer demand and favorable contract economics are also supporting Nebius’ growth prospects. During the quarter, the company signed four major agreements with Reflection, Cohere, a scaled U.S. new lab and a large U.S.-based quantitative trading firm, with the deals averaging more than $1 billion each. These midterm contracts generate yields of $20 million-$25 million per megawatt and include upfront payments covering roughly 50%-60% of associated capital expenditures. Nebius also continues to see demand for shorter-duration capacity, where it is negotiating contracts in the $40 million-$50 million-per-megawatt range and, in some cases, even higher.
Profitability is improving alongside the rapid revenue expansion. Group adjusted EBITDA reached $236 million in the second quarter, compared with a loss of $21 million a year earlier, while the adjusted EBITDA margin expanded to 41% from 32% in the first quarter. The improvement reflected higher revenues as well as early contributions from the asset-light model, Token Factory and recent acquisitions. Management also expects capacity coming online from company-owned data centers to begin supporting further margin improvement in the second half of 2027.
Image Source: Zacks Investment Research
Recently, Nebius announced the acquisition of Inferize, an inference optimization company, to strengthen the production inference capabilities of its Nebius Token Factory managed inference platform. The deal brings Inferize’s technology and systems engineering team into Token Factory.
Nebius is also expanding its capacity pipeline and diversifying the ways it can monetize that capacity. The company raised its year-end contracted power target to 5 gigawatts and expects almost all of that power to come online over the following three to three-and-a-half years. Its asset-light partnership model provides another avenue for expansion, with partners financing, building and operating facilities while Nebius contributes its full-stack platform and customer demand. In the last earnings call, the company highlighted that this structure can generate high-margin revenues while requiring minimal balance-sheet capital and could unlock additional capacity from 2027 onward.
Nebius Group N.V. Price, Consensus and EPS Surprise
Nebius Group N.V. price-consensus-eps-surprise-chart | Nebius Group N.V. Quote
However, Nebius’ rapid expansion requires substantial capital investment. Capital expenditures totaled approximately $5.7 billion in the second quarter, primarily reflecting purchases of GPUs and related hardware as well as data-center expansion, while the company continues to expect full-year 2026 capital expenditures of $20 billion-$25 billion. To support this spending, Nebius is relying on a combination of operating cash flow, customer prepayments, asset-backed financing and potentially corporate-level debt or equity-linked financing.
Investments in businesses that remain at an early stage are weighing on consolidated profitability relative to the core AI operation. Management said the difference between group adjusted EBITDA margins and those of the Nebius AI business reflects continued investments in Avride and TripleTen, both of which are still early-stage companies. Although the Nebius AI business is expected to continue generating the significant majority of group adjusted EBITDA, these investments continue to affect overall group margins.
The timing of capacity deployment also affects when additional infrastructure translates into revenues. In the last earnings call, management stated that after power is connected, Nebius must still commission the data center, build the network and clusters, deploy the platform and onboard customers before revenue generation begins, a process that can take several months.
A Look at NBIS' Valuation
In terms of price/book multiple, NBIS shares are trading at 5.69X, higher than the industry’s 3.79X. CRWV, MSFT and NVDA trade at a Price/Book of 7.98X, 8.82X and 25.14X, respectively.
Image Source: Zacks Investment Research
What to Do With NBIS Stock Now?
Nebius’ strong AI infrastructure demand, expanding capacity and improving profitability support its long-term growth prospects. However, the stock’s sharp rally and elevated valuation suggest that much of its growth potential may already be reflected in the current price.
Existing investors can hold the stock given Nebius’ strong AI infrastructure demand, expanding capacity pipeline and improving profitability. However, new investors can wait for a better entry point.
Currently, NBIS stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.