Key Points
Nebius has the assets to accomodate AI innovators just as demand is soaring.
Management has backed up bold growth predictions with a big Microsoft deal.
A pullback in AI spending could spark a Nebius stock sell-off.
- 10 stocks we like better than Nebius Group ›
Nebius Group (NASDAQ: NBIS) was somewhat of an unknown name entering 2025. The company emerged after its initial holding company divested the Yandex search engine assets to Russian investors in the wake of the Ukraine invasion. The retained assets, located in Amsterdam, are mainly focused on investing in and expanding data center artificial intelligence (AI) infrastructure.
Aided by its 16.5% gain in October, Nebius stock has now quadrupled in 2025, according to data provided by S&P Global Market Intelligence. Here’s what has investors piling into Nebius Group, and why the stock may have gotten ahead of itself.
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Image source: Nebius Group.
Demand for AI infrastructure is only getting stronger
Nebius positioned itself to cater to AI innovators at a time when the field is exploding. It has built vertically integrated AI infrastructure assets at scale for in-demand AI compute power.
Nebius has large-scale graphics processing unit (GPU) clusters deployed across Europe and the U.S. The company’s full-stack cloud platform merges the scale, flexibility, and reliability of a hyperscaler with the supercomputer characteristics needed by those using AI to create new ideas, improve processes, or develop new products and services.
The stock has soared this year as Nebius made progress on its bold prediction late last year that it would substantially increase revenue growth to an annualized revenue run rate of as much as $1 billion by the end of this year. That seemed far-fetched given that first-quarter revenue came in at just $55 million. Yet management actually boosted that guidance in its second-quarter report.
A multi-billion dollar agreement
Investors began piling in when the company reinforced those forecasts with a deal it announced with Microsoft in September. That five-year agreement is worth up to $19.4 billion. Consider that the company had a market cap of about $15 billion before that announcement. That valuation has now ballooned to about $28 billion.
In announcing that agreement, Nebius founder and CEO Arkady Volozh said that the long-term contract is the first of what he believes are more to come. Investors understandably want to be on board if and when new agreements are announced.
AI spending uncertainty
The macro picture is a little more nuanced. Seemingly unlimited capital spending by big-tech hyperscalers has the sector booming. Nebius stock advanced last month based on the assumption that spending will continue. If large tech companies appear to pull back on those investment plans, AI stocks in general will also pull back.
Considering that investors are valuing Nebius based on future deal announcements, that stock could experience a severe sell-off. Investors will know more when Nebius releases its third-quarter report on Nov. 11. It’s a stock for those with the right risk appetite because of those unknowns. Yet in the long run, Nebius is positioned well to profit as AI computing needs increase.
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Howard Smith has positions in Microsoft. The Motley Fool has positions in and recommends Microsoft. 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.