Nebius Stock Soars 57% in a Month: Time to Hold or Book Profits?

Nebius Group N.V. NBIS shares have gained 57.3% over the past month, outperforming the Zacks Computer & Technology sector and the Zacks Internet Software Services industry’s growth of 10.1% and 10.6%, respectively. The S&P 500 Composite is up 6.3% over the same time frame.Price PerformanceImage Source: Zacks Investment ResearchThe stock has risen 9.4% since it announced private placement of $1 billion in convertible notes on June 2. NBIS plans to utilize this to boost its global AI infrastructure footprint and drive up revenue opportunities in 2026.Despite the surge, NBIS stock is still trading 22.6% below its 52-week high and closed last trading session at $39.39. Investors are likely to contemplate what to do next, whether it is time to take profits or continue holding NBIS as the rally extends.NBIS’ Explosive Revenue Growth On Strong AI DemandNebius posted 385% year-over-year revenue growth in the first quarter of 2025, driven by accelerating demand for its AI infrastructure services. Annualized run-rate revenue or ARR saw a 700% jump, highlighting a structurally expanding revenue base. ARR for April was $310, which provides a strong start for the second quarter.Nebius is carrying strong momentum into the second quarter of 2025 and remains confident in achieving its full-year ARR guidance of $750 million to $1 billion. For 2025, the company also reaffirmed its overall revenue guidance of $500 million to $700 million.Nebius Group N.V. Price, Consensus and EPS Surprise Nebius Group N.V. price-consensus-eps-surprise-chart | Nebius Group N.V. QuoteNBIS Focuses on AI Cloud Differentiation  To gain a larger share of the AI cloud compute market, NBIS is focusing on technical enhancements that increase reliability and reduce downtime to boost customer retention.In the first quarter, Nebius significantly upgraded its AI cloud infrastructure through improvements to its Slurm-based cluster. These enhancements included automatic recovery for failed nodes and proactive system health checks designed to identify issues before they impact jobs. This directly lowers downtime and boosts capacity availability. According to the company, these changes led to an estimated 5% improvement in the availability of nodes for commercial use.Nebius is making substantial investments in improving its object storage capabilities, and the upgraded storage system ensures that big data sets can be easily accessed and saved quickly during model training, directly lowering time-to-result for end users. NBIS successfully graduated multiple platform services like MLflow and JupyterLab Notebook from beta to general availability.Nebius expanded integrations with external AI platforms like Metaflow, D Stack and SkyPilot, enabling customers to migrate tools with nominal friction.NBIS Strengthens Ties With NVIDIANebius is deepening ties with industry giants, particularly NVIDIA Corporation NVDA, an investor in the company. Nebius will be one of the first AI cloud infrastructure platforms to offer the NVIDIA Blackwell Ultra AI Factory Platform and become a launch partner for NVIDIA Dynamo. It will also support the DGX Cloud Lepton marketplace at launch, a significant channel expansion opportunity.Global Infrastructure Expansion Bodes WellNebius is focusing on building a global footprint, with capacity in the United States, Europe, and the Middle East. It added three new regions, including a strategic data center in Israel, in the last reported quarter. Infrastructure enhancement helps reduce latency, diversify risk, and extend support for global customer requirements, which is crucial for enterprise AI workloads.Diversified Business in High-Growth AreasApart from its core cloud platform, other notable offerings by Nebius include Toloka, an AI development platform; TripleTen, an edtech service; and Avride, an autonomous vehicle platform.NBIS holds stake in Toloka, which is now backed by Amazon’s AMZN Jeff Bezos and Shopify’s Mikhail Parakhin. This investment marks a key milestone in Toloka’s growth, enabling it to scale rapidly and enhance its focus as global demand for high-quality AI data continues to rise. Avride struck partnerships with major players like Uber, Hyundai, GrubHub, and Rakuten in the last reported quarter. NBIS has a 28% stake in ClickHouse, valued at around $6 billion presently.Plenty of Challenges Remain for NebiusNonetheless, the intense competition from behemoths remains a concern, along with profitability issues. Nebius is a relatively new entrant in the AI cloud infrastructure space, which boasts behemoths like Amazon, Microsoft MSFT and Alphabet. Amazon Web Services and Microsoft’s Azure cloud platform together dominate more than half of the cloud infrastructure services market. Additionally, Microsoft’s exclusive partnership with OpenAI gives Azure cloud the priority to access, leading AI models like GPT-4 Turbo and DALL·E.Despite its exceptional top-line growth, NBIS remains unprofitable, with management reaffirming that adjusted EBITDA will be negative for the full year 2025. Though it added that adjusted EBITDA will turn positive at “some point in the second half of 2025.”NBIS has also raised its 2025 capital expenditure forecast to approximately $2 billion from the previous estimate of $1.5 billion, primarily due to some planned fourth-quarter spending shifting into early first quarter. Higher capex can be a concern if revenue does not keep up the required pace to sustain such high capital intensity.  Analysts have significantly revised their earnings estimates downward for NBIS’ bottom line over the past 60 days.Image Source: Zacks Investment ResearchNBIS ValuationValuation-wise, NBIS is overvalued, as suggested by the Zacks Value Score of F.In terms of Price/Book, NBIS shares are trading at 2.94X, lower than the Internet Software Services industry’s ratio of 4, but it could mean more risk than opportunity.Image Source: Zacks Investment ResearchConclusion: Hold NBIS Stock for NowNebius’ impressive top-line growth, driven by surging AI infrastructure demand and strong ARR momentum, along with strategic partnerships, especially with NVIDIA, and global expansion efforts, strengthens its long-term positioning.However, the company remains unprofitable with adjusted EBITDA projected to be negative for the full year 2025. Rising capital expenditures and intense competition from cloud giants like Amazon and Microsoft are other headwinds.At present, NBIS carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amazon.com, Inc. (AMZN): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Nebius Group N.V. (NBIS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks