Nebius Group (NASDAQ: NBIS) shares climbed more than 10% on September 8, extending a rebound that began last Tuesday when the stock bottomed at $194.76. The rally pushed the price to an intraday high of $250, the strongest level since August 18, and mirrors gains in other neocloud names such as CoreWeave and IREN.
Palantir partnership fuels rally
The sharp move followed the announcement that Palantir Technologies will use Nebius as its preferred sovereign AI infrastructure partner. Under the agreement, Palantir will integrate Nebius compute and inference endpoints within its enterprise perimeter, giving Palantir customers access to Nebius's cloud and AI inference infrastructure.
Palantir CEO Alex Karp highlighted the strategic fit: “Nebius’ compute infrastructure powers your ability to run your own AI models under conditions you control. Our ontology and their infrastructure will undergird the sovereignty our partners are demanding.”
Nebius already counts Microsoft, Meta Platforms, Cloudflare, and Revolut among its clients. Management has said the company is fully sold out for the year and could sell its 2027 capacity today, underscoring robust demand for its AI cloud services.
Growth continues, but costs and dilution loom
Nebius reported second-quarter revenue of $582 million, up 454% year over year, bringing first-half revenue to $981 million. However, the expansion comes at a heavy price. Depreciation and amortization jumped to $259 million in Q2, roughly 44% of revenue, reflecting massive infrastructure spending.
Capital expenditures exceeded $5.7 billion, funded through borrowing and customer prepayments. Management expects to receive about $9 billion in prepayments. Additionally, the company has sold 12.7 million shares through June, raising $2.8 billion, and still has about 13 million shares available for sale. This overhang has contributed to a short interest of roughly 20%.
Technical outlook: bullish pattern points higher
The daily chart shows NBIS has crossed above its 50-day moving average and formed an inverted head-and-shoulders pattern, a classic bullish reversal signal. The stock is now attempting to break above the $250 pivot level on the Murrey Math Lines tool. If it succeeds, the next target could be the $312 pivot reverse level, with confirmation on a move above $300.
Investors should weigh the positive momentum against the company's heavy capital requirements and potential share dilution. Related coverage: Nebius gains on Nvidia's AI outlook and Burry's short position on Nebius.
This article is for informational purposes only and does not constitute financial advice.
