Nebius stock falls 32% from peak; AI infrastructure play still pricey

Nebius Group's stock has experienced a notable correction after an extraordinary run, falling roughly 32% from its all-time high of $299, though it had climbed more than 400% over the past year. The decline has prompted investors to question whether the company represents a bargain or remains overvalued given its position as one of the market's fastest-growing artificial intelligence infrastructure providers.

Despite the recent pullback, the underlying business has not weakened. The company recently reported revenue growth of 684% year-over-year to $399 million（約640億円）, with its AI cloud business growing an even more impressive 841%. Annual recurring revenue (ARR) has reached a run rate approaching $2 billion（約3200億円）, and management expects ARR to reach between $7 billion（約1.1兆円） and $9 billion（約1.4兆円） by the end of 2026. These metrics reflect exceptionally strong demand for Nebius' AI cloud platform. The company's business model—providing computing infrastructure for training and running AI models rather than building models itself—positions it to benefit from enterprise adoption of AI regardless of which specific AI models ultimately succeed. In this sense, Nebius is selling the picks and shovels behind the AI boom.

The stock's decline appears driven more by valuation reset than business deterioration. Following its extraordinary 400% rally, the stock had been priced for near-perfect execution; investors weren't simply expecting strong growth but anticipated Nebius would become one of the biggest winners in AI infrastructure. When expectations reach that level, even exceptional businesses can see share prices fall. The stock currently trades at a price-to-sales ratio of 58 times despite its 32% correction, suggesting the market is reassessing how much it will pay for AI infrastructure stocks after months of sustained gains rather than expressing disappointment with results.

Legitimate risks accompany the opportunity. Nebius plans to invest aggressively to expand its AI cloud infrastructure, requiring enormous capital expenditures over coming years. In the first quarter of 2026 alone, capex reached $2.5 billion（約4000億円）. While such spending could strengthen competitive positioning, it also increases execution risk if AI demand eventually slows or competing supply catches up. For long-term investors evaluating whether this pullback creates a buying opportunity, the key question is not whether the share price has fallen, but whether Nebius can continue signing long-term customer contracts, expand ARR, generate attractive returns on capital, and build competitive advantages beyond simply renting GPUs. Investors with conviction on these fronts and tolerance for volatility may find the recent correction interesting, though the stock remains extremely risky for conservative investors given its elevated valuation multiple.

Nebius' stock correction cannot be attributed to weakening business performance—the company continues to deliver exceptional growth across all key metrics, with revenue and AI cloud business growth both exceeding 680%, and management maintaining confidence in reaching $7 billion（約1.1兆円） to $9 billion（約1.4兆円） in annual recurring revenue by end of 2026. Rather, the decline reflects a market repricing after extraordinary gains, as investors have become more selective about valuation multiples for AI infrastructure stocks following months of sustained rallies. The stock's current price-to-sales ratio of 58 times, even after a 32% pullback, signals that the market had priced in near-perfect execution and elevated expectations.

The company operates in a structurally attractive position within the AI ecosystem, providing essential infrastructure regardless of which AI models ultimately dominate. However, the business model is not without execution risk. Nebius' strategy involves significant capital intensity—the first quarter of 2026 capex alone reached $2.5 billion（約4000億円）—and the company's ability to deploy this capital efficiently while maintaining competitive advantages beyond simple GPU rental will be critical. Should AI demand moderate or competing supply increase, the aggressive spending could pressure returns, making investor conviction in Nebius' long-term competitive positioning a key factor in whether the recent pullback represents a genuine opportunity.

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