Nebius Group N.V. NBIS stock has gained 123.6% in the past three months, outperforming the Zacks Computer & Technology sector and the Zacks Internet Software Services industry’s growth of 20.3% and 23.2%, respectively. The S&P 500 composite is up 11% over the same time frame. The company’s shares have soared 30.1% in a month.
NBIS has outpaced its peers, Microsoft Corporation MSFT and CoreWeave, Inc. CRWV, with MSFT up 0.3% and CRWV climbing 29.9% in the past three months.
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Following a strong rally, investors may wonder whether NBIS still has upside or if expectations have outpaced fundamentals. Let’s unpack the company’s fundamentals and challenges to ascertain the best course of action.
Factors to Consider
Nebius Group is rapidly expanding its AI-native hyperscaler platform through significant investments in capacity, products, customers and capital. The company has increased its contracted power capacity from more than 2 gigawatts to more than 3.5 gigawatts within last three months and now targets at least 4 gigawatts by the end of the year. It also announced a new Pennsylvania site that will support 1.2 gigawatts of power once fully operational, while more than 75% of its contracted capacity is now owned, reinforcing its strategy of building a full-stack AI infrastructure.
The company continues to strengthen its technology platform by expanding beyond compute into cloud services that cover the entire AI lifecycle, ranging from bare-metal infrastructure to multi-tenancy, inference and agentic capabilities. The acquisitions of Tavily, Eigen AI and Clarifai have added experienced engineers and researchers while enhancing inference optimization and agentic search capabilities. Nebius also expanded its partnership with NVIDIA Corporation NVDA and achieved NVIDIA Exemplar Cloud status for GB300 training workloads, positioning itself among a limited group of providers recognized across multiple GPU generations.
Nebius Group N.V. Price and Consensus
Nebius Group N.V. price-consensus-chart | Nebius Group N.V. Quote
Customer demand remains robust across a broad range of industries, with the company stating that several customers typically compete for every GPU it brings online. Pipeline generation during the first quarter increased 3.5 times sequentially, reflecting growing demand across AI-native companies, enterprises and software vendors. Customers from fintech, physical AI, life sciences, manufacturing, energy and pharmaceuticals are increasingly adopting the company's platform, supporting its strategy of serving a diversified customer base through its full-stack AI cloud offerings.
Nebius also reported strong financial and operational performance during the first quarter. Group revenue increased 684% year over year to $399 million, while the Nebius AI business delivered 841% revenue growth and reached an annualized run-rate revenue of $1.9 billion. Adjusted EBITDA margins expanded significantly, supported by strong revenue growth and operating leverage. The company further strengthened its balance sheet through a $4.3 billion convertible note offering, a $2 billion equity investment from NVIDIA and record customer prepayments, increasing cash and cash equivalents to $9.3 billion while reiterating its full-year revenue and EBITDA guidance.
For 2026, Nebius anticipates annualized run-rate revenue of $7 billion to $9 billion, group revenue of $3 billion to $3.4 billion and group adjusted EBITDA margin of around 40%.
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However, the company expects quarterly adjusted EBITDA margins to fluctuate during 2026 as investments are made ahead of capacity deployment. Management indicated that margins are likely to decline in the second quarter because capacity additions are weighted toward the back half of the year, with investments being recognized before the related revenue contribution. Margins are expected to recover to first-quarter levels in the third quarter and improve further in the fourth quarter.
Nebius has also substantially increased its 2026 capital expenditure guidance to between $20 billion and $25 billion from the previous range of $16 billion to $20 billion. The additional investment is intended to support 2027 capacity backed by customer commitments and will require incremental financing through asset-backed structures, corporate debt or other funding alternatives, as the company continues to evaluate the most appropriate sources of capital while maintaining a disciplined capital structure.
A Look at NBIS' Valuation
In terms of price/book multiple, NBIS’ shares are trading at 9.09X, higher than the Internet Software Services industry’s 4.13X. CRWV, MSFT and NVDA trade at a Price/Book of 9.93X, 7.17X and 26.3X, respectively.
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What to Do with NBIS Stock Now?
Given its strong AI growth drivers, expanding infrastructure and solid execution, Nebius appears well-positioned for long-term growth. However, near-term margin pressure and elevated capital spending poses concern.
Existing investors may consider holding their positions, while prospective investors may wait for a more favorable entry point.
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.
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This article originally published on Zacks Investment Research (zacks.com).