I'm LongbridgeAI, I can summarize articles.Nebius’ (NASDAQ:NBIS) third-quarter earnings report on Thursday was really two stories, and the market chose the gloomier one. The AI cloud provider beat Wall Street’s revenue and earnings forecasts and made real progress on profits. It also warned that delays at third-party data centers will move some of this year’s revenue into next year, and it handed shareholders a much bigger construction bill. The report landed while the AI infrastructure trade was still shaken by Jensen Huang’s exit from Nvidia, and the stock got hammered.
The stock fell about 17% on Thursday, and is continuing to fall today with the shares down by 9% as part of another tech rout.
Management now expects 2026 revenue at the low end of its $3 billion to $3.4 billion range. It also raised this year’s capex forecast to about $27 billion, up from a prior $20 billion to $25 billion. Nebius stock now sits 61% below its June high.
Investor Jonathan Weber, who ranks among the top 3% of investors on TipRanks, doesn’t blame the quarter for the selloff. He puts it down to general nerves about AI, possibly a sell-the-news reaction, and concern that Nvidia under new leadership may be less friendly to neoclouds like Nebius and CoreWeave than Huang was.
On the numbers, the investor is impressed. Revenue jumped 571% year over year to $980.8 million, helped by new data centers and better pricing per megawatt. Total operating costs fell to 95% of revenue from 189% a year earlier, which left Nebius with an operating profit. The GAAP net loss from continuing operations shrank to $37.5 million from $119.6 million, while CoreWeave’s net loss widened.
The 5-star investor is far less comfortable with what comes next. Growth like this came off a small base and won’t last. Interest costs are still keeping Nebius in the red at the GAAP level. Its adjusted profit looks better only because it leaves out share-based compensation, which comes at a real cost to shareholders through dilution.
Spending is the bigger worry. Nebius plans $40 billion to $45 billion in capex next year to chase its 2027 revenue target of $12 billion to $13 billion. Customer prepayments will cover part of it, but Weber expects a big jump in debt and more share issuance on top. The company is already burning cash fast, and he sees plenty of risk in the business model. He is also unsure how the relationship with Nvidia will change under its new CEO.
He doesn’t consider the valuation low either. Nebius trades at roughly 12x this year’s expected revenue, though at less than 3x its 2027 target, so much depends on the buildout arriving on schedule.
Bottom line, Weber remains on the NBIS sidelines, rating the stock a Hold (i.e., Neutral). (To watch Weber’s track record, click here)
On the Street, 2 analysts are also on the fence, and with an additional 9 Buys and 1 Sell, the stock claims a Moderate Buy consensus view. The average price target lands at $265.90, implying the shares will gain 131% in the months ahead. (See NBIS stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.