Nebius Group Stock Looks Tempting -- but There's 1 Big Thing to Watch

Core Insights - Nebius Group has experienced significant stock price growth, increasing over 5 times in 2025 before a recent decline, making it attractive for growth-oriented investors [1] - The company has secured major contracts with Meta Platforms and Microsoft, indicating strong demand for its AI infrastructure services [3][4] - Despite the positive revenue growth, Nebius Group is facing mounting losses, which could impact its financial health as it expands capacity [6] Company Performance - Nebius Group's market capitalization is approximately $24 billion, with a current stock price of $94.08 [2] - The company reported a year-over-year revenue growth of 355% in Q3, with projected annualized revenue run rate of $7 billion to $9 billion by the end of 2026 [4] - Nebius has sold out all available capacity in Q3, indicating strong demand but also limiting potential revenue growth [4] Strategic Developments - Nebius has entered into a five-year contract with Meta valued at around $3 billion, which could have been larger if more capacity was available [3] - The company also announced a strategic investment from Uber Technologies in its autonomous driving technology subsidiary, Avride [5] Capacity Expansion - Nebius is expanding its data centers in Finland, the U.K., and Israel, with plans to secure additional sites in the U.S. and Europe [7] - The expansion will be financed through increased debt, asset-backed financing, and issuing new shares, which may dilute existing shareholders [8][9] Financial Considerations - Nebius reported a net loss of $119.6 million in Q3, up from a loss of $43.6 million in the same period last year [6] - The company has a trailing 12-month price-to-sales ratio of 93, which may raise concerns among investors despite its rapid growth [10]