Why Nebius Stock Rallied This Week

Nebius Group (NASDAQ: NBIS) has been one of the artificial intelligence (AI) stocks investors have piled into in the last six months. Shares have soared 140% in that time. Yet it is trading 30% below recent highs as fears grew that AI infrastructure spending has increased too far, too fast.

That sell-off reversed course this week, though, with Nebius shares rallying 14%, according to data provided by S&P Global Market Intelligence. The question now is which camp of investors will be right -- those that say AI spending is a house of cards, or those that think there is plenty of runway left.

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Is the AI money real?

As more and more deals were announced for data center compute power, some analysts began to question whether long-term financing would truly materialize. Some deals included what has been dubbed circular financing, with cash-rich companies like Nvidia investing in peers that would then purchase hardware from Nvidia using that money. That hardware would be installed in data centers, providing cloud computing capacity owned by companies like Nebius.

Other companies, such as Meta Platforms, are utilizing off-balance sheet financing arrangements to fund massive AI data center projects. Investors are starting to question these techniques for obtaining AI compute capacity.

One of those investments is a five-year, $3 billion commitment for Nebius to provide AI infrastructure to Meta, which was announced when Nebius reported its third-quarter earnings earlier this month.

If Meta doesn't experience returns on those investments, deals like that could fall apart. That concern drove Nebius stock lower. AI bulls won out this week, though, with investors buying that dip and counting on the AI revolution to continue.

Howard Smith has positions in Nvidia and has the following options: short February 2026 $170 calls on Nvidia. The Motley Fool has positions in and recommends Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.