Nebius: 3 Overblown Fears Weighing Down the Stock

Nebius Crushes Wall Street Expectations

Nebius Group (NBIS) is a leading artificial intelligence infrastructure company that provides specialized computing platforms tailored for AI workloads. Known as a neocloud, Nebius builds data centers equipped with the latest high-performance graphics processing units (GPUs) and advanced networking gear needed to train, fine-tune, and deploy large-scale machine learning models and generative AI applications.

Thursday, smashed Wall Street expectations. The Zacks Rank #2 (Buy) stock delivered revenue of $981M vs Wall Street estimates of $908M (+571% YoY). EBITDA of $466M blew away Wall Street expectations of $353M. Nebius has now beaten Zacks Consensus Estimates in three of the past four quarters, delivering a robust average surprise of 30.47%.

Despite its robust top-line growth, Nebius shares have been cut in half over the past three months due to 3 reasons:

CoreWeave Debt Concerns

On October 14^th, fellow neocloud company CoreWeave (CRWV) saw shares fall more than 15% as bond yields jumped to distressed levels and Gartner warned of potential slowdowns in AI infrastructure spending. Because Nebius is a competitor, shares fell in sympathy. However, not all neocloud debt is created equal. CoreWeave is currently paying 8.3% interest on its debt while Nebius pays 2.3% and IREN (IREN) pays 1.7%. While IREN appears to have an advantage over Nebius on the surface, investors must exercise nuance. IREN’s debt is largely funded by converts, which create dilution. Conversely, Nebius has been able to receive a large portion of the capital needed upfront in its recent contract wins.

Blue Wave in Texas Sparks Data Center Regulation Fears

A Democratic mid-term election sweep sparked AI data center regulation concerns for neoclouds. Nebius shares fell more than 7% on the news. However, it appears investors took a “sell first, ask questions later approach.” Nebius has no data centers located in Texas. In other words, if anything, data center restrictions in Texas could make Nebius’ existing locations more valuable.

Jensen Huang Departure

On Thursday, NVIDIA (NVDA) CEO Jensen Huang resigned after multiple allegations of affairs emerged. Amid the news, investors are putting pressure on Nebius shares. However, the company’s operational trajectory and partnership with NVIDIA remain insulated from the leadership change due to binding multi-year contracts, mutual financial incentives, and structural demand.

Bottom Line

Ultimately, the sharp disconnect between Nebius Group’s surging fundamentals and its depressed share price points to an overreaction by the market. While sector-wide debt anxieties, regional regulatory headlines, and leadership shakeups at NVIDIA have rattled short-term sentiment, none of these headwinds structurally impair Nebius’s business model or contract backlog. With triple-digit revenue growth, superior capital efficiency, and a Zacks Rank #2 (Buy) rating, Nebius appears well-positioned to rebound once investors look past the noise and focus on execution.

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This article originally published on Zacks Investment Research (zacks.com).

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