Nebius to Report Q3 Earnings: How to Approach the Stock Now?

Core Insights - Nebius Group N.V. (NBIS) is set to report its third-quarter 2025 results on November 11, with a consensus estimate of a loss of 50 cents per share and total revenues projected at $150.6 million [1][9] Company Overview - Nebius, based in Amsterdam, is focused on providing specialized artificial intelligence (AI) infrastructure, primarily through its AI-powered cloud platform designed for intensive AI and machine learning workloads [2] - The company recently launched Nebius AI Cloud 3.0 "Aether," aimed at enterprise-scale AI applications [2] - Nebius resumed trading as a public company in October 2024 [2] Earnings Predictions - Current models do not predict an earnings beat for NBIS, with an Earnings ESP of 0.00% and a Zacks Rank of 4 (Sell) [3] Revenue Drivers - The demand for AI cloud services, particularly due to the growth of generative AI and machine learning, is expected to positively impact revenue [5] - A significant deal with Microsoft worth $17.4 billion for dedicated GPU capacity is anticipated to contribute to revenue growth [5] - The company reported a ninefold increase in AI cloud revenue in the previous quarter [5] Competitive Landscape - Nebius faces intense competition from major players like Microsoft and Amazon, as well as emerging companies like CoreWeave [7] - The company is a relatively new entrant in the AI cloud infrastructure market [7] Financial Outlook - Nebius has projected a capital expenditure of $2 billion for 2025, indicating substantial cash outlay [8] - The company raised nearly $4.2 billion through public and private offerings, but high capital spending poses risks if revenue growth does not keep pace [8] Stock Performance - Over the past six months, NBIS shares have increased by 233.7%, outperforming the Zacks Computer & Technology sector and the S&P 500 [12] - Comparatively, other major players like Microsoft and Amazon have seen lower stock performance during the same period [13] Valuation Concerns - NBIS stock is considered to have a stretched valuation, with a Price/Book ratio of 6.95X, higher than the industry average of 4.28 [14] - This indicates a higher risk profile for investors [14] Strategic Considerations - The company is expanding its global footprint with data centers in the U.S., Europe, and the Middle East [6] - However, execution risks associated with aggressive scaling and reliance on equity stakes for funding could impact growth [10]