Who published this market news?

Zacks published this market news item, with source attribution at http://www.zacks.com/.

Nebius Stock Jumps 124% in 6 Months: Time to Buy, Hold or Sell?

Nebius Group N.V. NBIS has significantly outperformed the broader market, with its stock surging 124.1% over the past six months. This compares favorably with gains of 13.2% for the Zacks Computer & Technology sector, 10.5% for the Zacks Internet Software Services industry and 8.9% for the S&P 500…

Nebius Group N.V. NBIS has significantly outperformed the broader market, with its stock surging 124.1% over the past six months. This compares favorably with gains of 13.2% for the Zacks Computer & Technology sector, 10.5% for the Zacks Internet Software Services industry and 8.9% for the S&P 500. The momentum has accelerated recently, with NBIS advancing another 83.7% in the last three months.

Among its peers, NBIS has also delivered superior returns, while Microsoft Corporation MSFT declined 18.9% and CoreWeave, Inc. CRWV gained a modest 5.9% during the same six-month period.

After a strong rally, investors may question whether NBIS still offers meaningful upside or if expectations have run ahead of its fundamentals. Let’s examine the company’s core strengths and challenges to determine the most prudent path forward.

Key Factors to Consider

Nebius continues to expand its AI-native hyperscaler platform through significant investments in capacity, products, customers and capital. In first-quarter 2026, the company increased its contracted power capacity from more than 2 gigawatts to more than 3.5 gigawatts and now targets at least 4 gigawatts by the end of 2026. It also announced a new Pennsylvania site that will support 1.2 gigawatts of power once fully operational. More than 75% of its contracted capacity is now owned, supporting its strategy of building a full-stack AI infrastructure. Management highlighted that the company is developing the business across four dimensions — capacity and scale, product and functionality, customers and demand, and capital — while focusing on execution across all four areas.

Nebius is also strengthening its technology platform by expanding beyond compute into cloud services that span the entire AI lifecycle, from bare-metal infrastructure and multi-tenancy to inference and agentic capabilities. The acquisitions of Tavily, Eigen AI and Clarifai have added experienced engineers and researchers while strengthening 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, placing it among a small group of providers recognized across multiple GPU generations. Management stated that these additions enhance its vertically integrated AI cloud platform and broaden its software capabilities.

Nebius Group N.V. Price, Consensus and EPS Surprise

Nebius Group N.V. price-consensus-eps-surprise-chart | Nebius Group N.V. Quote

Customer demand remains strong across a broad range of industries. The company stated that several customers typically compete for every GPU it brings online, while pipeline generation during the first quarter increased 3.5 times sequentially. Customers from AI-native companies, enterprises and software vendors, as well as industries including fintech, physical AI, life sciences, manufacturing, energy and pharmaceuticals, continue adopting the platform. Management also noted that demand continues to exceed available capacity, pricing remains strong across GPU generations and customers are increasingly making prepayments to secure future capacity.

Nebius also delivered strong financial and operational results during the first quarter. Group revenues increased 684% year over year to $399 million, while the Nebius AI business posted 841% revenue growth and reached an annualized run-rate revenues of $1.9 billion. Group adjusted EBITDA margin improved to 32%, while the Nebius AI business reported a 45% adjusted EBITDA margin. The balance sheet strengthened following 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. The company reiterated its 2026 guidance for annualized run-rate revenues of $7 billion to $9 billion, group revenues of $3 billion to $3.4 billion and an adjusted EBITDA margin of around 40%.

Despite the strong outlook, Nebius expects quarterly adjusted EBITDA margins to fluctuate during 2026 as it invests 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 recognized before the related revenue contribution. Margins are expected to return to first-quarter levels in the third quarter and improve further in the fourth quarter as additional capacity comes online.

Nebius has also increased its 2026 capital expenditure guidance to between $20 billion and $25 billion from the previous range of $16 billion to $20 billion. The higher spending is intended to support 2027 capacity backed by customer commitments. To fund this expansion, the company expects to rely on additional financing through asset-backed structures, corporate debt, customer prepayments and other funding alternatives while continuing to evaluate the most appropriate sources of capital and maintain a disciplined capital structure.

CoreWeave is also grappling with extremely high capital expenditures, projecting $31 billion-$35 billion in 2026 spending to support ongoing capacity buildouts and higher component costs.

For MSFT, capital expenditures are expected to increase to more than $40 billion in the fourth quarter of fiscal 2026, with the sequential increase including roughly $5 billion from higher component pricing as well as the impact from finance leases.

A Look at NBIS' Valuation

In terms of price/book multiple, NBIS shares are trading at 7.53X, higher than the industry’s 3.91X. CRWV, MSFT and NVDA trade at a Price/Book of 7.69X, 7X and 24.12X, respectively.

What to Do With NBIS Stock Now?

NBIS' expanding AI infrastructure, robust customer demand and strong revenue momentum bode well for its long-term growth prospects, but elevated capital spending and a premium valuation remain concerns.

Existing investors may consider holding their positions, while new investors could wait for a better entry point.

Currently, NBIS stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners Up

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