Key Takeaways
- Nebius stock fell 12% in a week as the midterms and a Microsoft report hit the neoclouds, IREN and CoreWeave included.
- Microsoft’s tighter oversight of Nebius’s projects is a bigger risk than the election, though Nebius carried a sliver of CoreWeave’s debt at midyear.
- Thursday’s report has to show the run rate climbing toward management’s $7 billion to $9 billion December target.
Nebius Group (NBIS) fell 12% in the week through Tuesday, Nov. 10, with IREN (IREN) off 19% and CoreWeave (CRWV) down 9%, as the midterms and a report on Microsoft (MSFT) hit the neoclouds. Nebius reports third-quarter results before the open on Thursday, Nov. 12.
Washington and Texas hit the whole group
The day after Democrats won both houses of Congress, the neoclouds sank on fears of tighter rules for AI infrastructure. Texas added to the pressure, as Democrat Gina Hinojosa beat Greg Abbott for Texas governor after campaigning against data center expansion, though Nebius has disclosed no Texas data center. On Mad Money on Nov. 5, CNBC’s Jim Cramer singled out the neoclouds: “Not all of these companies are going to make it.”
Microsoft is the real worry
The bigger hit came on the morning of Nov. 5, when Bloomberg reported that Microsoft is tightening oversight of projects from Nebius, IREN and Nscale, and debating whether to sign new neocloud deals.
Microsoft’s contract with Nebius is worth $17.4 billion to $19.4 billion, and the capacity behind it is still under construction. On Nov. 5, IREN pushed its target of more than $4 billion in annualized revenue to January from year-end, on what co-CEO Daniel Roberts called “a customer-requested design change and supplier timing.” The customer, IREN said on its call, was Microsoft.
TIKR tracks 22 analysts on Nebius. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Nebius, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Nebius’ Analyst Ratings
Less debt, half the multiple
Still, Nebius had net borrowings of just $504 million at June 30, leases excluded, against $29.5 billion at CoreWeave, which reported $846 million of third-quarter interest expense on Nov. 10. Nebius is borrowing too: analysts see its net debt reaching about $34 billion by the end of 2027. They expect revenue to jump from $530 million in 2025 to $12.3 billion in 2027:
Thursday’s report will show whether the revenue run rate has climbed from June’s $3.0 billion toward management’s $7 billion to $9 billion December target, and what Nebius says about Microsoft. TIKR has the stock at 5.4x forward sales, about half its five-year average of 10.6x:
Cramer’s probably right that not every neocloud makes it. But with a fraction of CoreWeave’s debt today and its stock at half its usual multiple, Nebius looks better placed than most. If the Microsoft build slips like IREN’s, though, that discount could stick around.
So what is Nebius stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
