Nebius Group N.V. NBIS shares have surged more than 60.7% year to date, outperforming the broader Zacks Computer & Technology sector’s decline of 0.9% and the Zacks Internet Software and Services industry’s appreciation of 8.8%. 

However, this Artificial Intelligence (AI) infrastructure services and solutions provider’s shares have declined 3.8% since Feb. 20, following fourth-quarter 2024 results. The decline in shares can be attributed lower Annual Recurring Revenue (ARR) in the December quarter ($90 million), as NBIS focused on building sales and marketing teams and transitioning customers to its new AI-platform. 

Nevertheless, revenues of $37.9 million surged 466% year over year, driven by the core AI infrastructure business, which jumped 602% year over year in the reported quarter. The completion of the aforesaid initiatives is expected to drive NBIS’ clientele. For the March quarter, the company expects an ARR of at least $220 million, while for the full year 2025, ARR is expected between $750 million and $1 billion.

NBIS Stock’s Performance

Image Source: Zacks Investment Research

The positive guidance is noteworthy, given the company’s strong liquidity. NBIS boasts a strong balance sheet, as it raised $700 million in a private placement with investors, including NVIDIA NVDA, Accel and Orbis, in December 2024. NBIS had $2.4 billion in cash at the end of the fourth quarter of 2024.

Technically, Nebius shares are trading above the 50-day moving average, indicating a bullish trend.

NBIS Shares Trade Above 50-Day SMA

Image Source: Zacks Investment Research

Will the momentum in NBIS shares continue? Let’s dig deep to find.

Expanding Offerings Drive NBIS’ Prospects

Nebius’ primary offering includes an AI-centric cloud platform that supports intensive AI and machine learning workloads in both owned and colocation data center capacity. Other notable offerings include Toloka, an AI development platform; TripleTen, an edtech service; and Avride, an autonomous vehicle platform.

NBIS expanded its infrastructure offerings in the fourth quarter of 2024 with the launch of its first U.S. NVIDIA GPU cluster in Kansas City (5MW initial phase). The facility is set to go live at the end of the first quarter of 2025 and will initially house thousands of NVIDIA Hopper GPUs. The facility is expandable to 40MW.

Nebius’ GPU cluster in Paris, featuring NVIDIA H200 Tensor Core GPUs, began operation in the reported quarter. At the end of fourth-quarter 2024, the total deployed base of NVIDIA Hopper GPUs, including H200 Tensor Core, nearly doubled sequentially. NBIS plans to deploy more than 22,000 NVIDIA Blackwell GPUs in data centers in the United States and Finland in 2025. 

Built on the NVIDIA accelerated computing platform, Nebius launched The Nebius AI Cloud platform, which features flexible, on-demand compute, high-performance storage and managed services for AI-specific tasks. The company also expanded the Nebius AI Studio offering by adding vision model support and new Large Language Models, including DeepSeek R1, in January 2025. NBIS also released Tracto.ai, a serverless platform for compute-intensive workloads.

These developments bode well for the company, as the Total Addressable Market (TAM) for GPU-as-a-service and AI cloud is expected to witness a CAGR of more than 35% between 2023 and 2030. AI technologies is expected to hit $800 billion by 2030, with an average CAGR of 29% between 2023 and 2030. Nebius’ other three businesses have a combined TAM of roughly $150 billion.

NBIS’ Earnings Estimates Steady, Revenues to Decline Y/Y

The Zacks Consensus Estimate for first-quarter 2025 loss is pegged at 35 cents per share, unchanged over the past 30 days.

The consensus mark for first-quarter 2025 revenues is pegged at $77.5 million, indicating year-over-year decline of 96.88%.
 

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

NBIS Stock: Buy, Sell or Hold?

Nebius, which resumed trading publicly on Nasdaq on Oct. 21, 2024, is currently trading at a premium, as suggested by the Value Score of D. 

Despite a strong infrastructure business and a rich partner base that includes NVIDIA, growth prospects are muted in the near term, given a challenging macroeconomic environment globally. Increasing lead times as customers become more selective is expected to hurt top-line growth. NBIS is investing significantly on expanding capacity which is expected to keep margins under pressure at least in the near term.

Nebius currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

Nebius Group N.V. (NBIS) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research