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Nebius Group (NBIS) surged after Nvidia (NVDA) disclosed that it had taken a position in the artificial intelligence (AI) infrastructure firm, but with massive losses and explosive expansion, is NBIS stock a hold, sell, or buy?
Nebius Group is a high-growth AI infrastructure firm whose stock is in the spotlight after Nvidia revealed a new stake in the firm in a recent 13F filing. The endorsement triggered a rally, and strong institutional demand is indicating expanding interest in Nebius’ AI cloud platform. However, although the firm’s latest quarterly results showed record revenue growth, an elevated loss and capital expenditures impair its financial health over the longer term.
The wider technology space remains among the strongest investment themes, with companies with a specialization in AI and high-performance computing benefiting from stratospheric valuations. Nebius’ recent results validated its explosive revenue growth, with a growing presence in U.S. and EU data centers.
Investors must now weigh whether Nebius’ impressive pace, coupled with Nvidia’s backing, justifies its high valuation.
About Nebius Stock
Nebius Group (NBIS), headquartered in Amsterdam, is a company with a specialization in GPU cloud compute, AI cloud platforms, and high-performance computing. Its cloud platform empowers developers to scale and deploy AI-related solutions, making Nebius a major player in the ongoing tech revolution.
Nebius stock has been extremely volatile. Shares have appreciated over 31% in the year year-to-date, trouncing the Nasdaq Composite Index’s ($NASX) gain of 1.3%. However, its shares are down 28% from their 52-week high.
The stock’s valuation is still a topic of debate. Nebius trades at a price-sales multiple of 80x, way above the industry norm. Unlike bigger cloud computing players in the market such as Amazon (AMZN) and Microsoft (MSFT), Nebius is still not profitable, with its net loss in 2024 amounting to $396.9 million.
Nebius Stock Beats on Earnings
The company's revenues reached $37.9 million in the fourth quarter, reflecting year-over-year growth of 466%. Nebius recorded an adjusted EBITDA loss of $75.5 million as well as a net loss in continuing operations of $136.6 million for Q4.
For the year, revenues rose 462% to $117.5 million, indicating robust demand. Annual recurring revenue (ARR) of $90 million was below prior guidance due to longer customer purchasing cycles and the process of transferring customers to its new AI cloud platform. The company is still optimistic, however, with an ARR prediction of at least $220 million for March 2025.
Nebius continues on a path of expansion, unveiling a new Nvidia GPU cluster in Kansas City, where thousands of Nvidia Hopper GPUs are planned to be housed by the fourth quarter of 2025. The company also deployed H200 Tensor Core GPUs in Paris, France, and said it would expand with 22,000 Blackwell GPUs in U.S. and Finnish data centers in 2025.
These infrastructure investments are a testament to Nebius' drive to expand its AI cloud business but are a high-cost endeavor. Its capital expenditures were a record $417.6 million in Q4 alone and took its annual expenditures to a record $808.1 million. Although Nebius has a cash balance of $2.45 billion, there are still fears over high cash burn and potential future fundraises.
What Do Analysts Expect for Nebius Stock?
Nebius Group has one covering analyst, giving it a “Moderate Buy” rating, signaling cautious optimism.
The mean price target for Nebius stock is $51, reflecting potential upside of 28%. Though the growth of the company is rapid and Ai infrastructure is increasingly relevant, Nebius’ large capital expenditures as well as its enormous losses create uncertainty about its value as well as its path to profitability.
