Nebius Group N.V.

(NASDAQ Global Select)
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Bullish +65

Nebius Soars 7% as a Rival’s AI Cloud Beat Lifts Neoclouds After “Reactionary” Selloff

Company update AI-generated analysis

📈 Nebius Group stock rose 7% today as positive sentiment from rival neocloud IREN helped reverse a previous 15% selloff.

💰 Rival IREN reported AI cloud revenue nearly tripled to $200 million, with contract prices rising 11-12% on multi-year deals.

🤝 Nebius holds a massive Microsoft contract valued between $17.4 billion and $19.4 billion while building necessary capacity.

📊 Analysts project Nebius revenue to grow from $530 million in 2025 to $22.9 billion by 2028 without needing estimate cuts.

💹 The stock currently trades at approximately 5.4x forward sales, roughly half its five-year average of 10.6x.

🔍 Co-CEO Daniel Roberts of IREN attributed a revenue target delay to a customer design change from Microsoft, not lack of demand.

🚀 NVIDIA, which invested $2.0 billion in Nebius, is monitoring the sector closely ahead of its own October quarter report.

📅 Nebius's third-quarter earnings report next week will test if annualized revenue can reach the $7-9 billion guidance for December.

📉 Thursday's market drop was characterized by Jefferies strategist Jane Gibbons as a 'reactionary' move given strong underlying fundamentals.

Bullish Signals
  • Nebius stock gained 7% today, recovering from a prior 15% slide after rival IREN demonstrated resilient AI demand with tripling revenue.
  • The broader neocloud sector shows pricing power with rivals raising contract prices by 11-12%, suggesting buyers are still paying up for compute.
  • Analysts maintain strong growth expectations, forecasting Nebius revenue to expand from $530 million in 2025 to $22.9 billion by 2028.
  • The company secures a massive Microsoft contract worth $17.4-19.4 billion, providing a clear long-term revenue pipeline despite capacity build-out challenges.
  • Nebius trades at a significant discount to its historical valuation, currently priced at 5.4x forward sales versus a five-year average of 10.6x.
Risk Factors
  • A customer design change from Microsoft delayed the rival's revenue target, potentially creating similar timing risks for Nebius's own large Microsoft contract.
Full Analysis
Nebius Group (NBIS) shares rose 7% today, recovering from a previous 15% decline, following positive signals from rival neocloud IREN. The rally suggests that the recent market downturn for AI computing stocks may have been overdone, as demand for AI capacity remains robust with contract prices rising significantly. The strength of the sector is highlighted by IREN's report showing AI cloud revenue nearly tripled to $200 million in the quarter, driven by higher pricing on long-term deals. This validates the thesis that buyers are still willing to pay premium prices for compute power, providing a supportive backdrop for Nebius's own business outlook despite minor supply-side delays. Analysts maintain their bullish stance on Nebius, with revenue estimates projected to grow from $530 million in 2025 to $22.9 billion by 2028. The stock currently trades at a discount of roughly half its five-year average forward sales multiple, presenting a potential value opportunity as the company builds capacity for its massive Microsoft contract. The primary focus remains on Nebius's upcoming third-quarter report next week, which is expected to be a critical test of its growth trajectory. Management has guided for annualized revenue to climb from $3.0 billion in June toward a range of $7 billion to $9 billion by December, and the market will watch closely to see if this target is met.