Nebius Group (NASDAQ: NBIS) has had its share of hurdles and headwinds, but is now well-positioned to advance its stock price. The primary hurdle was the divestiture of its Russian operations, which closed last year.
Now, the company is a leaner, nimbler, and more focused entity that is able to pursue its AI agenda. That is, building and operating an advanced network of HPC data centers for the AI industry. It is among the earliest adopters of NVIDIA’s (NASDAQ: NVDA) full-stack approach to AI infrastructure and is a Reference Platform NVIDIA Cloud Partner.
Reference Platform NCPs are a critical block in AI infrastructure. NVIDIA recognizes them as adhering to the highest standards for performance, security, and support. The designation alerts third-party AI operators to the fact that Nebius Group’s AI-focused data centers are built on NVIDIA’s architecture and optimized for AI workloads, LLMs, and generative AI. That’s a competitive edge in a world where AI compute demand is expected to grow exponentially for years.
Nebius Group’s Solid Q1 and Guidance Affirm AI Demand Outlook
Nebius had a strong quarter in FQ1 with revenue in its core operations surging by 385% year-over-year (YOY). The surge was driven by high-double to high-triple-digit increases in all segments, led by AI infrastructure. Critical details include improving operational quality despite continued losses. Losses are primarily due to R&D, investment, and non-cash share-based compensation and are expected to dwindle as the year progresses. The guidance is the driving force for this market, reaffirmed with full-year revenue in the range of $500 to $700 million. That is a forecast for significant sequential acceleration, which may be cautious due to the increasing demand for AI capacity.
The balance sheet is in good condition, but there is some risk of dilution. The company’s share count increased sequentially in Q1 and may continue to rise as the year progresses. Even so, the balance sheet highlights include ample cash, increasing equity, and ultra-low leverage, with total liabilities of less than 0.1x the equity.
The analysts’ response to the news was bullish, extending a trend that began the month prior. It includes increasing coverage, upgrades to Buy, and a rising price target that forecasts a 35% upside at the consensus. The revision trend is leading to the high range, which adds 30% to it, and institutional activity aligns with the bullishness. They own only 22% of the market in mid-June, but are buying on balance in 2025, and their activity spiked in Q2. The largest shareholders include Orbis Allan Gray, Slate Path Capital, and Citadel Advisors, which collectively own approximately 10%. Orbis Allan Gray is a South African-based firm utilizing a contrarian approach to long-term investing.
Catalysts Ahead for Nebius Group
Not only is Nebius Group on track to accelerate its hypergrowth in FQ1 2025, but it is also tracking toward profitability. The full-year guidance includes losses, but the shift to positive EBITDA is expected in the second half. The takeaway for investors is that profitability is at hand and is likely to improve in 2026, resulting in adjusted full-year profits. Consequently, both the 2025 and 2026 forecasts are likely to be conservative. As it is, MarketBeat’s reported consensus for F2025 is about 15% below the mid-point of the guidance range, setting the company up to significantly outperform.
The chart action since the report is also bullish. The charts indicate a market that has bottomed and is poised for a complete reversal. The critical resistance point is near $51 and marks the baseline of a double-bottom pattern. If the market moves above this level and holds it, it will likely advance from the baseline by the magnitude of the pattern, which is more than $30. A $30+ advance from $51 aligns this market with its all-time highs and puts it on track for a new high that could be set in 2026.
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