Key Takeaways
- Nebius Group stock rose 7% today after a rival neocloud said its AI cloud revenue nearly tripled to $200 million.
- That rival’s rising contract prices suggest AI computing demand held up, so Thursday’s drop in Nebius looks overdone.
- A customer’s design change delayed the rival’s revenue target.
- Nebius’s results next week are the next test.
Nebius Group (NBIS) is up 7% today. It’s winning back part of Thursday’s 15% slide after a rival neocloud showed that buyers of AI computing are still paying up.
After Thursday’s close, the rival said its AI cloud revenue nearly tripled from the prior quarter to $200 million.
Jefferies equity strategist Jane Gibbons called Thursday’s selloff “reactionary.”
Buyers are still paying more
The rival’s contract pricing rose 11% on three-year deals and 12% on five-year deals. After the quarter, the rival, IREN (IREN), signed a five-year deal at about $22 million per megawatt. That’s right inside the $20 million to $25 million Nebius’s management gave for its own midterm deals in August.
Analysts expect Nebius’s revenue to climb from $530 million in 2025 to $22.9 billion in 2028.
IREN’s quarter gives analysts no reason on demand to cut those estimates.
Microsoft sets the calendar
IREN’s target of more than $4 billion in annualized revenue moved from year-end to January. Co-CEO Daniel Roberts blamed “a customer-requested design change and supplier timing.” That customer was Microsoft (MSFT).
Microsoft is still buying: Azure revenue grew 48% in its September quarter. But on Oct. 28 it said some third-party capacity deliveries had slipped.
Nebius’s Microsoft contract is worth $17.4 billion to $19.4 billion, and Nebius is still building the capacity behind it. A design change there would push revenue out, however strong demand is.
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
NVIDIA goes next
NVIDIA (NVDA), which invested $2.0 billion in Nebius in March, guided to $108.0 billion of revenue for its October quarter. Its Nov. 17 report will show whether neoclouds kept ordering through the midterm scare.
Half its usual multiple
Even after today’s bounce, Nebius trades at about half its five-year average of 10.6x forward sales. TIKR’s latest reading is 5.4x.
Frankly, I think Thursday’s selloff went too far. IREN’s buyers are paying more, and I see nothing yet suggesting Nebius’s will pay less.
Nebius’s third-quarter report, expected next week, is the test. Its annualized revenue run rate has to climb from $3.0 billion in June toward the $7 billion to $9 billion management guides for December.
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!
