Nebius Group stock 36% off high on AI funding fears

Nebius Group builds specialized data centers fitted with Nvidia GPUs and leases them primarily to Microsoft and Meta Platforms. That customer base, plus more than $40 billion in long-term commitments from investment-grade customers and an equity stake from Nvidia, has driven expectations that revenue will climb from around $3.34 billion this year to $12.24 billion next year. The company is also among the first to offer access to AI servers using Nvidia's Vera Rubin platform.

The tension is that Nebius must build out data centers before it can monetize them. Management anticipates $20 billion to $25 billion in capex this year, funded through debt and new stock, and the market cap of $43 billion reflects a valuation that some see as hefty for a company diluting shareholders and adding debt before consistent profitability. Elon Musk recently predicted on X that many AI cloud companies could fail, saying debt markets have pulled back on lending to companies without meaningful revenue streams outside data centers.

Still, Nebius has support from its critical customers: it receives significant upfront payments, guides for around $9 billion in total prepayments in 2026, and held about $8 billion in cash at the end of the second quarter. The stock trades at less than four times next year's revenue estimate of $12.24 billion, which may not require unrealistic profit margins given the anticipated growth, making Nebius a solid buy for risk-seeking growth investors.