Nebius Group (NASDAQ: NBIS) shares have extended their decline this month, with the stock sliding to around $209, more than 30% below its 2025 peak. The sell-off is part of a broader retreat in AI-related equities as investors weigh the impact of rising safety concerns and calls for industry guardrails.
AI safety fears trigger sell-off
The recent downturn was sparked by warnings from prominent tech leaders, including OpenAI's Sam Altman, Anthropic's Dario Amodei, and Tesla's Elon Musk, who have urged a slowdown in AI development to allow for proper oversight. An Anthropic researcher even suggested that unchecked AI growth could pose an existential risk within a few years. These comments have fueled anxiety across the sector, hitting neocloud providers like Nebius, CoreWeave, and IREN particularly hard.
However, some analysts argue that the panic may be overblown. Despite the rhetoric, AI companies are likely to continue massive capital expenditures on data centers and computing infrastructure, driven by intense competitive pressure. For instance, OpenAI is reportedly raising funds at a $1.2 trillion valuation, while Anthropic is preparing for a public offering that could value it at $2 trillion. This suggests that demand for AI compute capacity remains robust.
Nebius growth remains explosive
Nebius's fundamentals paint a picture of rapid expansion. In its latest quarterly report, the company posted revenue of $582 million, a 454% year-over-year increase, bringing first-half revenue to $981 million. Adjusted EBITDA swung to a positive $236 million, compared with a $21 million loss in the prior-year period.
Analysts project full-year revenue to surge 531% to $3.34 billion, with another jump to $12 billion expected next year. These estimates could prove conservative if the AI infrastructure boom continues. The company's recent partnership with Palantir, which sent shares up 10% in a single session, underscores its growing traction in the enterprise AI space.
Technical outlook suggests possible rebound
From a technical perspective, the stock is showing signs of stabilization. It remains above the 50% Fibonacci retracement level at $187 and the 100-day exponential moving average, both of which have historically acted as support. Moreover, the price action is forming an inverted head-and-shoulders pattern, a classic bullish reversal signal. The stock is also hovering near the Strong, Pivot, Reverse level on the Murrey Math Lines, which could provide a springboard for a bounce.
If the pattern plays out, NBIS could retest its previous high near $300. However, risks remain, including potential dilution, high cash burn, and intense competition from larger players like Nvidia and CoreWeave.
Investors should also consider the broader market context. While AI safety fears have pressured the sector, some names have benefited. For example, CrowdStrike hit a record high as security concerns drove demand for its products. Similarly, Nvidia's dip on slowdown fears has been viewed by some as a buying opportunity.
Weighing the opportunity
The key question for investors is whether the current sell-off represents a genuine buying opportunity or a value trap. Nebius's revenue growth is undeniably impressive, but the company is still burning cash and faces significant dilution risk. The valuation, while lower than its peak, remains elevated relative to traditional metrics.
For those with a long-term horizon, the AI infrastructure buildout appears far from over. As SpaceX's $13.3 billion AI compute deal illustrates, demand for computing power is surging across industries. Nebius, with its European data centers and growing customer base, is well-positioned to capture a slice of this market.
That said, the stock's volatility is likely to persist. Investors should monitor upcoming earnings and any regulatory developments that could impact the sector. As always, diversification and risk management are crucial.
This article is for informational purposes only and does not constitute financial advice.
