What’s Happening With Nebius Group Stock?

September 10th, 2025 by Trefis Team
NBIS: Nebius logo
NBIS
Nebius

Shares of Nebius Group stock (NASDAQ: NBIS) soared more than 45% in extended trading on Monday after the company announced a landmark deal to provide Microsoft (NASDAQ:MSFT) with GPU infrastructure capacity worth $17.4 billion over a five-year period. Unlike traditional hyperscalers such as Amazon’s AWS or Microsoft’s Azure that offer a broad suite of general-purpose cloud services, Nebius belongs to a new class of “Neoclouds” – focused specifically on high-performance infrastructure for AI workloads. The company offers computing, storage, managed services, and tools designed for building, tuning, and running AI models. So what does the deal mean for Nebius and does it make the stock more attractive?

Image by Pete Linforth from Pixabay

A Big Deal

The agreement is transformational for Nebius. In an SEC filing, the company said GPU services will be deployed in multiple tranches, with a total contract value of $17.4 billion through 2031. Microsoft also has the option to purchase an additional $2 billion worth of services. Over five years, this equates to revenues of more than $3.5 billion per year – a massive leap compared to Nebius’s projected 2025 revenues of just $570 million. Microsoft has increasingly turned to third parties to address a shortage of cloud infrastructure for AI workloads.

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The software giant has often fallen short of AI compute capacity needed both for internal development of AI products and for selling Azure-branded AI services. Microsoft is also committed to supplying computing resources to its AI partner OpenAI, further straining capacity. To meet demand, Nebius will provide Microsoft with dedicated capacity from a new data center in Vineland, New Jersey, beginning later this year. The company also disclosed it is evaluating financing options to accelerate growth, with capital expenditures for the deal covered through cash flow from the contract and debt secured against it.

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Nebius Competitive Advantages

With demand for generative AI remaining robust, although there are other specialized players in this space, Nebius stands out for a couple of reasons. Firstly, the company has a close relationship with AI chip titan Nvidia (NASDAQ:NVDA), which makes the most capable chips while essentially setting the standards for the industry. Nvidia is both a key partner and investor, having taken part in a $700 million funding round last year and holding over 1 million shares in the company. This relationship could give Nebius preferred access to Nvidia’s much sought-after GPUs such as the Blackwell super chips compared to other cloud providers. This could prove to be a major advantage in a supply-constrained GPU market where demand far outpaces availability, particularly for leading-edge chips.

Another factor that sets Nebius apart is its vertically integrated model. The company designs its own servers in-house, bypassing OEMs and working directly with manufacturers to cut costs, better optimize performance, and quickly integrate the latest GPUs. This level of control not only reduces supply chain dependencies, but also shortens deployment cycles. This is important for keeping up with fast-moving AI lifecycles and also gives the company an edge in terms of performance-per-watt compared to other players.

Buy Nebius Stock?

So is Nebius stock a buy at current levels of about $95 per share? The stock trades at about 40x consensus FY’25 revenue. This compares to larger rival CoreWeave which trades about 10x FY’25 revenues. However, there are some good reasons for the elevated multiple. Firstly, Nebius’ growth outlook is strong. Per consensus estimates, Nebius sales are projected to grow 160% next year, faster than CoreWeave, and this number could actually be much higher when factoring in the MSFT deal. Moreover, Nebius technology advantages such as its proprietary technology stack could also help differentiate it versus rivals.

By controlling both hardware and software, Nebius can fine-tune performance for specific AI workloads, giving it a long-term competitive edge. Nebius also has a strong balance sheet. NBIS debt was $1.2 billion at the end of the most recent quarter, giving it a debt to equity ratio of under 5%. NBIS cash (including cash equivalents) makes up $1.7 billion of $5.1 billion in total Assets, yielding a Cash-to-Assets Ratio of 32.9%. This should allow Nebius to continue building its global footprint with less financial risk. This could result in considerable interest expenses and this could drag  down profitability in the longer run, despite its rapid revenue growth.

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