nbis stock: Key Q3 Test and What to Watch

Alright, let's talk about Nebius Group (NBIS). Up 346% this year? That’s… noticeable. The market’s clearly identified them as a player in the AI infrastructure game, alongside names like CoreWeave and Oracle. They rent out GPU access – basically, shovels in the AI gold rush. But is the hype justified, or are we looking at another flash in the pan?

The Microsoft Effect: A Blessing and a Curse?

The headline grabber is the five-year, $17.4 billion deal with Microsoft. Huge, right? The stock jumped 200% on that news, and for good reason. Securing that kind of commitment validates their business model in a big way. They were aiming for a $1 billion annual recurring revenue (ARR) run rate by December. That target is now… quaint.

But here’s where the data analyst in me gets twitchy. That deal concentrates a massive chunk of their ARR with one customer. It’s like betting your entire portfolio on a single stock. What happens if Microsoft shifts its strategy? What if they decide to build their own internal infrastructure? Suddenly, Nebius isn’t looking so hot.

Management’s been talking about expanding their data center footprint – Kansas City, New Jersey, Iceland, France, Finland, Israel. (That’s a lot of moving parts, geographically speaking). They’re clearly trying to diversify. But the question is, can they land another hyperscaler like Amazon Web Services or Google Cloud Platform? If they can’t, that revenue concentration is a ticking time bomb.

And this is the part of the report that I find genuinely puzzling. The gross margin is listed as -2007.45%. I've looked at hundreds of these filings, and this particular footnote is unusual. I need to perform some further analysis on this figure to see if this is a data error.

The Stock Split Mirage

Then there’s the stock split chatter. At around $120 a share, people are wondering if Nebius will follow the path of companies like Chipotle and make its stock more accessible to retail investors. Honestly, it's premature. Plenty of companies trade at much higher prices without splitting – Booking Holdings, AutoZone, even Netflix. Nebius needs to get closer to $500 before a split even becomes a serious consideration. As some analysts have noted, it's worth keeping an eye on the possibility of a future split. Stock-Split Watch: Is Nebius Group Next?

The real issue isn’t the stock price; it’s the underlying financials. Nebius isn’t profitable yet. They’re burning cash to build data centers and buy GPUs. They raised $1.15 billion in a public offering in September and another $3.16 billion in convertible notes. That’s a lot of capital. They claim to have achieved profitability on adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization). But adjusted EBITDA is a notoriously flexible metric. What about actual net income? Show me the cash flow statement.

Management needs to provide a detailed capital allocation strategy and an expected timeline for ROI on these infrastructure investments. Otherwise, it’s just a guessing game.

The analyst community is estimating the AI infrastructure wave will reach $7 trillion over the next five years. Maybe. Market forecasts are always optimistic. The key is execution. Can Nebius scale its operations efficiently? Can they manage that Microsoft relationship effectively? Can they diversify their customer base? The answers to those questions will determine whether this AI darling soars or crashes back to earth.

A Calculated Gamble, Not a Sure Thing