Is Nebius Stock Still A Buy After Its Recent Gains?

Nebius (NBIS) stock jumped 10% on January 12th following an analyst upgrade and news about early NVIDIA Rubin platform adoption. More impressively, it’s up 200% in the last twelve months. So, should you take profits? We don’t think so. This rally likely has much further to run, and another 2x from here wouldn’t be shocking.

But before we delve any deeper, if you seek an upside with less volatility than holding an individual stock, consider the High Quality Portfolio. It has comfortably outperformed its benchmark – a combination of the S&P 500, Russell, and S&P MidCap indexes – and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics. Separately, see – What’s Behind The 135% Rise In Alphabet Stock?

Image by Pete Linforth from Pixabay

Isn’t the Valuation Insane For NBIS Stock?

Yes, it looks absurd at first glance. NBIS trades at:

• 63.1x sales (vs. 3.3x for the S&P 500)
• 105.2x earnings (vs. 24.2x for the S&P 500)

Those are very high multiples. So what justifies them?

The Growth Story Is Exceptional

Consider what Nebius has delivered:

• 3-year average revenue growth: 126% annually (S&P: 5.6%)
• Last 12 months: Revenues exploded 462%, from $65M to $363M (S&P: 6.4%)
• Most recent quarter: Up 355% year-over-year to $146M (S&P: 7.3%)

This isn’t incremental growth – it’s exponential. When you’re projected to grow revenues at 370% this year and another 520% next year, a high P/S multiple becomes more defensible.

What About Profitability?

Here’s where things get messy. The operating margin is terrible at -148.4% (operating loss of $539M over the last four quarters). The company is burning cash to build capacity. But here’s the counterpoint: Net margin sits at 60%. How? The company had significant non-operating gains from the revaluation of investment in equity securities, which boosted net income to $218M despite operating losses. Surely, this is non-recurring, but the underlying business model can be highly profitable once infrastructure is built. In fact, the consensus among analysts is that Nebius will achieve positive operating profit in the final quarter of 2026, and it is expected to reach 25% operating profit margin in late 2027.

Is the Balance Sheet Strong Enough to Support This Growth?

Absolutely. The financial position is fortress-like:

• Debt-to-equity under 1% (just $50M in debt against a $27B market cap)
• Cash represents 71% of total assets ($2.5B cash out of $3.5B total assets)
• S&P 500 averages only 7.2% cash-to-assets

But there’s more to this. Nebius has raised $4.3 billion after its Q3 report through public and private offerings to fund GPU clusters. This means that in their Q4 report, the debt-to-equity ratio will likely be around 17%. See, the company needs to fund its aggressive data center expansion, but its leverage is still not at dangerous levels.

What’s Driving the Optimism?

Two catalysts stand out:

• First, the NVIDIA partnership. Being among the first cloud providers to deploy NVIDIA’s Rubin platform (Vera Rubin NVL72) in H2 2026 gives Nebius a competitive edge in the AI infrastructure arms race.
• Second, capacity is sold out. Multibillion-dollar contracts with Microsoft and Meta have essentially pre-sold the company’s current and near-future capacity. When demand exceeds supply by this margin, pricing power follows.

But Can It Handle a Downturn?

Not well, historically. During the 2022 inflation shock, NBIS fell 78% peak-to-trough (vs. 25% for the S&P). During COVID, it dropped 41% (vs. 34% for the S&P). Recovery was strong both times, but the volatility is real.

What Could Go Wrong?

Several things:

• Capital intensity: Building data centers isn’t cheap, and delays or cost overruns could crush margins
• Execution risk: Scaling this fast is hard. Can management deliver?
• Customer concentration: Heavy reliance on a few major clients creates vulnerability
• Competition: Amazon, Microsoft, and Google aren’t sitting still, while Coreweave and Iren are also scaling.

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The Bottom Line

NBIS gets a “Strong” overall rating: very strong growth, very strong balance sheet, weak profitability, weak downturn resilience.
The valuation is sky-high, and that’s legitimately risky. But when you’re growing revenues at 400%+ with sold-out capacity and partnerships with NVIDIA, Microsoft, and Meta, that risk may be priced correctly.

This isn’t for everyone. If you can’t stomach 50%+ drawdowns, stay away. But for long-term investors with high risk tolerance, NBIS offers a compelling case that another 2x gain is achievable. The infrastructure AI buildout is still in early innings, and Nebius is positioned at the center of it. In fact, the average of analysts’ estimates for Nebius stands at $163, implying a solid 50% upside.

Could we be wrong? Absolutely. But the asymmetry feels favorable here.

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