Nebius Group (NASDAQ: NBIS) saw its shares climb more than 6% in extended trading after Nvidia's latest earnings report reinforced expectations of sustained growth in artificial intelligence infrastructure spending. The stock moved to around $215, up from its regular session close of $213, as investors digested the implications of Nvidia's bullish outlook for AI compute demand.
Nvidia's forecast fuels AI infrastructure optimism
Nvidia, a major investor in Nebius, reported quarterly revenue of $96 billion, surpassing the $92 billion consensus estimate. More notably, the company guided to fiscal 2028 revenue growth of approximately 70%, well above the 40% analysts had modeled. That guidance assumes no sales to China, suggesting the actual trajectory could be even stronger.
Nebius is positioned as a key provider of AI cloud infrastructure, counting Nvidia and Meta Platforms among its clients. The company's recent financial results reflect the surging demand: second-quarter revenue reached $582 million, up 454% year over year, while first-half revenue climbed 529% to $981 million. Management has indicated that its computing capacity for 2027 is already effectively sold out, pointing to continued momentum.
Analysts project Nebius's annual revenue will jump 532% this year to $3.35 billion, followed by another 250% increase to $11 billion in the next fiscal year. If that pace holds, the company could approach the $50 billion revenue mark within a few years.
Cost pressures and cash burn remain concerns
Despite the top-line growth, Nebius faces significant headwinds. Nvidia plans to raise GPU prices by up to 15% in January, and costs for servers and memory are also climbing. These increases are likely to intensify Nebius's capital expenditure, which already reached $5.7 billion in the last quarter.
To fund its expansion, Nebius has been tapping equity markets. It recently sold 12.7 million shares, raising $2.8 billion, and has 12.3 million shares remaining under its at-the-market offering program. This dilution risk is a key reason why short interest in the stock stands at over 21%, with notable investors like Michael Burry among the bears.
Competitive landscape intensifies
Competition is also heating up. Anthropic recently announced a $45 billion partnership with Nscale, a direct rival to Nebius. Rumble (now Rum Holdings) has entered the AI infrastructure space, joining established players like Meta, RIOT Platforms, and MARA Holdings. These developments underscore the crowded and capital-intensive nature of the AI cloud market.
Technical picture shows pullback after earnings gap
From a chart perspective, NBIS stock has retreated from its post-earnings high of $276 to the current $213, filling the fair-value gap created after its last results. The MACD indicator has flashed a bearish crossover, though a bullish abandoned baby candlestick pattern appeared on August 24. Following Nvidia's strong report, the stock may attempt to retest resistance near $250 before potentially resuming its broader downtrend.
Investors will be watching whether Nebius can translate its revenue surge into sustainable profitability while managing cost inflation and competitive pressures. The company's ability to secure long-term contracts and maintain pricing power will be critical to its valuation.
This article is for informational purposes only and does not constitute financial advice.
