Nebius Group Shares Drop Following CoreWeave's Disappointing Earnings Report
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Source: Fool
- Stock Volatility: Nebius Group shares fell by 14.9%, mirroring CoreWeave's 21.9% decline, reflecting market concerns over the emerging neocloud sector, where both companies are growing rapidly but incurring significant losses.
- Industry Context: As a new concept in AI cloud computing, Nebius and CoreWeave purchase GPUs and rent out computing capacity to hyperscalers and AI startups, achieving triple-digit revenue growth but also facing substantial losses.
- Market Reaction: Nebius's earnings report earlier this month disappointed the market, leading to increased stock volatility as investors remain uncertain about how to value these high-risk companies.
- Future Outlook: Analysts expect Nebius's revenue to grow by 531% to $3.35 billion by 2026, indicating faster growth than CoreWeave, and if it can maintain this triple-digit growth, the stock may attract more investors.
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Analyst Views on NBIS
Wall Street analysts forecast NBIS stock price to rise
5 Analyst Rating
5 Buy
0 Hold
0 Sell
Strong Buy
Current: 91.190
Low
130.00
Averages
164.20
High
211.00
Current: 91.190
Low
130.00
Averages
164.20
High
211.00
About NBIS
Nebius Group NV is a Netherlands-based infrastructure company operating in the technology industry. The Company is engaged in developing a portfolio of artificial intelligence-related technology assets. It is involved in creating an artificial intelligence-centric player to integrate the essential elements of artificial intelligence development with infrastructure, data and advisory globally. It offers products and services such as a cloud platform for artificial intelligence-related workloads, development team services for autonomous vehicles, development of generative artificial intelligence. Nebius builds full-stack infrastructure to service the growth of the global AI industry, including GPU clusters, cloud platforms and tools and services for developers. Company is developing three other businesses that operate under their own brands: Toloka AI, TripleTen and Avride.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Rapid Customer Expansion: The company reported a nearly 150% increase in customers spending over $1 million, with 80% of these clients also expanding into data storage services, indicating success in diversifying customer needs.
- Capital Expenditure Plans: CoreWeave plans to increase capital spending to at least $30 billion by 2026, double last year's spending, aimed at meeting contracted customer demand, although this poses risks due to its high leverage.
- Robust Contracted Revenue Backlog: CoreWeave currently holds over $66 billion in contracted revenue backlog, indicating a strong demand foundation for the upcoming quarters, despite facing competition and market uncertainties.
See More
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- Significant Revenue Growth: CoreWeave achieved over 160% year-over-year revenue growth, reaching $5 billion in annual revenue, making it one of the fastest-growing cloud companies in history, reflecting strong demand and potential in the AI market.
- Rapid Customer Expansion: The company reported a nearly 150% increase in customers spending over $1 million, with 80% of these clients also expanding into data storage services, indicating success in meeting customer demand.
- Capital Expenditure Plans: CoreWeave plans to increase capital expenditures to at least $30 billion by 2026, double last year's spending, aimed at supporting contracted long-term compute demand, although this raises financial risk for the company.
- Robust Contracted Revenue Backlog: CoreWeave currently has over $66 billion in contracted revenue backlog, indicating strong demand for the upcoming quarters, despite a recent 18% drop in stock price due to market concerns about an AI bubble.
See More
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- Market Concerns: AI investment is currently facing market worries, as investors are uneasy about companies' spending on AI computing, despite industry leaders asserting that significant investment is necessary to avoid being left behind, creating potential delays in short-term returns.
- Microsoft's Value Opportunity: Microsoft (MSFT) saw its stock drop about 30% despite posting strong financial results for Q2 FY2026, indicating a market underestimation of its Azure cloud business's profitability and AI investment potential, with its current price-to-earnings ratio nearing its lowest since 2020, making it a prime buying opportunity for investors.
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- Nebius Rapid Expansion: Nebius (NBIS), while not a large tech company, is experiencing rapid growth with its AI-first cloud computing platform, expected to reach an annual run rate of $7 billion to $9 billion by the end of 2026, as demand continues to rise with the addition of more data centers, and its current stock price drop of about 25% presents a favorable buying opportunity for investors.
See More
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- Microsoft Stock Analysis: Microsoft's stock has dropped about 30% from its all-time high despite strong financial results for Q2 FY2026, indicating its profitability from the Azure cloud computing business; however, the market's reaction to its spending plans appears irrational, potentially undermining investor confidence.
- Broadcom Growth Expectations: Broadcom's custom AI chip division, collaborating with various AI hyperscalers, is projected to achieve revenue growth rates of 53% and 39% for fiscal years 2026 and 2027, respectively, suggesting a doubling of revenue over the next two years, making it a focal point for investors.
- Nebius Rapid Expansion: Nebius's AI-first cloud computing platform had an annual run rate of $1.25 billion at the end of 2025, expected to rise to $7 billion to $9 billion by the end of 2026, driven by the rapid rollout of data centers, showcasing strong demand and growth potential in the AI sector.
- Market Investment Opportunities: Despite a temporary lull in AI investments, there are still buying opportunities in stocks like Microsoft and Broadcom, with investors advised to capitalize on current low prices for potential substantial returns in the future.
See More
MarketBeat Weekly Recap – February 23 to February 27
Market Trends: Investors are shifting from technology stocks to traditional defensive assets like gold, with evidence suggesting a rotation towards blue-chip stocks as tech stocks remain under pressure.
Earnings Reports: Anticipation surrounds upcoming earnings reports, particularly from companies like NVIDIA and PayPal, with analysts highlighting strong performance expectations and potential growth opportunities.
AI Sector: The AI infrastructure trade continues to be a significant market driver, with investors advised to focus on key stocks within the AI supply chain that are expected to perform well.
Investment Opportunities: Analysts recommend looking for undervalued stocks, particularly in the retail sector, as well as identifying potential long-term opportunities amidst market volatility and recent sell-offs.
See More
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- Index Performance: The Dow Jones Industrial Average fell by 0.92%, while the Nasdaq Composite decreased by 0.43%.
See More
