Is Nebius Stock a Buy Now?

The arrival of artificial intelligence (AI) has created an enormous demand for computing capacity by the businesses working with AI systems. The situation resulted in a substantial tailwind for AI infrastructure companies capable of fulfilling this need, such as Nebius Group (NASDAQ: NBIS).

For example, tech giant Microsoft's hunger for computing power led to a multi-year contract with Nebius. Consequently, Nebius shares have soared over 200% in 2025 through the week ended Nov. 28. As the AI industry expands over the coming years, Nebius could be poised for outsize business growth.

Let's dive into the company to find out if it's a worthwhile investment for the long haul.

Image source: Getty Images.

Nebius Group's business performance

Nebius is in an enviable position. In the third quarter, customer demand was so great, the company sold out of computing capacity. It also added Facebook parent Meta Platforms as a client in a five-year, $3 billion deal.

Thanks to the strong appetite for its AI infrastructure, Nebius saw Q3 sales soar 355% year over year to $146.1 million. Its Q3 annualized run rate revenue (ARR) stood at $551 million. ARR represents an estimate of annual income, and is calculated by taking sales from the final month of the quarter and multiplying it by 12.

Management believes ARR can grow to at least $7 billion, and as high as $9 billion, by the end of next year. That would be an impressive feat if the company pulls it off. The market demand for computing power could continue for years. The AI industry is forecast to grow rapidly from $255 billion in 2025 to a stunning $1.7 trillion by 2031.

To support the AI sector's expansion, Nebius is increasing its AI infrastructure footprint. The company originally planned to bring 1 gigawatt (GW) of power online in 2026 for its AI data centers. That's equivalent to the electricity required to run San Francisco. As of Nov. 11, Nebius has more than doubled that goal to 2.5 GWs.

The price of Nebius' success

To fund its expansion, the company raised $4.3 billion in September through an equity offering and convertible senior notes. It's also pursuing another equity issuance in November. This contributed to Nebius shares falling in recent weeks as the multiple equity offerings add to share dilution.

That's not all. Nebius pursued debt financing as another avenue to fuel its business expansion. However, that led to the company's Q3 debt ballooning to over $4 billion from just $6.1 million in 2024.

Moreover, the company's expansion comes with added costs. As a result, Q3 operating expenses more than doubled year over year to $276.3 million. This resulted in an operating loss of $130.2 million, up from a loss of $80.6 million in Q3 2024.

To buy or not to buy Nebius Group stock

In weighing an investment in Nebius, a consideration that could pay off in the future is the company's pair of subsidiaries. These are Avride, which develops autonomous tech for vehicles and delivery robots, and TripleTen, an education technology platform.

In Q3, Avride secured an investment from Uber Technologies, which suggests its technical capabilities are solid. In fact, Avride plans to launch a robotaxi service in partnership with Uber by the end of 2025. Meanwhile, TripleTen saw revenue growth double year over year. The financial results for both businesses are not broken out separately, so there's no telling to what degree they contribute to Nebius' performance.

Another factor to consider is share price valuation. This can be evaluated using Nebius stock's price-to-sales (P/S) ratio, which indicates how much investors are paying for every dollar of revenue generated over the past 12 months.

Data by YCharts.

The chart shows the company's sales multiple has dropped substantially from where it was a year ago, but at a P/S ratio exceeding 60, the stock is still pricey. Revenue is rising rapidly, but with mounting debt and expanding operating losses, the heightened valuation doesn't look justified.

The huge customer demand delivered by AI suggests Nebius is a compelling business to invest in. Its Avride autonomous tech is also an area that could deliver meaningful financial impact down the road.

But the stock's elevated valuation, and the company's potential to fall into a precarious financial situation as its debt grows, means investors should be armed with a high risk tolerance to consider a Nebius investment. Even then, the ideal approach is to wait for the share price to drop before deciding to buy.

Robert Izquierdo has positions in Meta Platforms, Microsoft, and Uber Technologies. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, and Uber Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.