After Surging 298%, Is Nebius Stock Still a Buy? Here's What History Says.
Key Points
The company has secured large customers, but needs to bring substantial new computing capacity online to serve them.
To reach the midpoint of 2026 guidance, it will need to average about $934 million in revenue over the final three quarters.
Nebius' share price swings show how quickly financing and construction concerns can offset enthusiasm over new contracts.
Nebius Group (NASDAQ: NBIS) stock has surged about 298% over the past year. The rally was supported by rapid revenue growth, major agreements with technology giants such as Meta Platforms and Microsoft, and a $2 billion investment from Nvidia.
The share price gain appears impressive, considering that the stock has already fallen about 26% from its record closing price in June. However, the pullback also suggests that investors are no longer rewarding the company for announcements alone.
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Nebius must demonstrate that its contracts, data centers, and heavy spending can generate sufficient revenue to support its valuation.
Image source: Getty Images.
Strong demand still requires execution
Nebius provides cloud computing infrastructure and software that companies use to train and run artificial intelligence (AI) models. In the first quarter, the company's revenue surged 684% year over year to $399 million, while its core AI-cloud revenue jumped 841% to $390 million. Management expects revenue in the range of $3 billion to $3.4 billion in 2026.
The long-term agreements with Meta Platforms and Microsoft give Nebius strong visibility into future demand. However, the company must still build and equip the required data centers on schedule before it can recognize revenue from those contracts.
What history tells us
Nebius shares jumped nearly 15% on March 16 after the company announced its new long-term AI infrastructure agreement with Meta Platforms. However, the next day, Nebius announced plans to raise $3.75 billion through convertible notes. The final principal amount later reached around $4.34 billion. By March 31, the stock had fallen around 20% from its March 16 closing price.
The company's share price later reached a record closing price of $286.69 on June 18 and closed at $212.58 on Aug. 3. This does not prove that Nebius' stock has peaked. It shows that large contracts can quickly lift investor expectations. But the financing and construction required to fulfill those contracts can put downward pressure on the shares.
The valuation leaves little room for delays
Nebius shares are currently trading at nearly 17 times the midpoint of management's 2026 revenue guidance of $3.2 billion. Hence, the company is already trading at a premium valuation.
To reach the $3.2 billion midpoint of its full-year guidance, Nebius must generate about $2.8 billion over the remaining three quarters, which implies an average of roughly $934 million in revenue per quarter, more than double its first-quarter revenue. An evenly paced growth path would require revenue to rise about 49% sequentially each quarter, reaching approximately $1.3 billion in the fourth quarter.
While this target is possible, it is also demanding. Nebius' AI cloud revenue already grew 82% sequentially in the first quarter. Management also expects a significant increase in capacity during the third quarter. However, delays in bringing that capacity online could postpone revenue recognition.
Nebius remains a watch list stock for now. However, the company's upcoming earnings results need to show that revenue and data center capacity are rising fast enough to support the valuation. Investors should also watch whether the AI infrastructure expansion requires significantly more borrowing or new share issuance, which could dilute existing shareholders.
Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.