Why Nebius Stock Recovered After Plunging This Week

Core Insights - Nebius Group (NASDAQ: NBIS) experienced significant stock volatility, with shares dropping nearly 15% before recovering to close the week 2% higher than the previous Friday's close, as investors assessed the potential revenue realization from its contract backlog [1][6] Financial Position - Nebius is in a relatively strong financial position compared to its peer, CoreWeave, despite taking on debt to expand its capacity. Nebius currently has negative net debt, indicating it has more cash than debt [3][4] - The company's stock is priced based on expectations of achieving an annual revenue run rate between $7 billion and $9 billion by the end of 2026, a significant increase from an anticipated $1 billion run rate at the end of the current quarter [6][8] Market Sentiment - Concerns over rising debt levels in the AI infrastructure sector have led to investor anxiety, particularly highlighted by CoreWeave's high debt position. This has contributed to the selling pressure on Nebius shares earlier in the week [3][4] - The recovery in Nebius's stock price was partly influenced by Citigroup's "buy" rating for CoreWeave, suggesting a potential 100% upside for that stock, which positively affected sentiment across the sector [4][5] Revenue Risks - There is a risk that if customers reduce their spending on long-term agreements worth billions with Nebius, the anticipated revenue growth may not materialize, leading to further stock price volatility [5][6]