Nebius Stock Keeps Falling. Here's Why You Should Be a Buyer

"Nebius Group ( NASDAQ:NBIS ) was pulled out of obscurity earlier this year when Nvidia ( NASDAQ:NVDA ) revealed its hidden investment portfolio had taken a stake in the AI data center stock . It participated in a $700 million private placement last December and today owns nearly 1.2 million shares valued at about $112 million at current prices. It has quickly become a pivotal force in the AI infrastructure landscape, capitalizing on the explosive need for GPU-intensive processing."

"This focus has driven remarkable growth, with core AI revenues soaring approximately 400% year-over-year and 40% quarter-over-quarter in the latest period. The stock surged to record highs last month, reflecting investor enthusiasm for its positioning in the booming AI sector. Yet, shares have since plummeted 33% from that peak, including a sharp 20% decline over the past week. The downturn traces back to third-quarter earnings that fell short of revenue expectations, raising flags about near-term margins strained by aggressive investments in expansion."

"In the race to dominate AI, energy supply emerges as the primary limiting factor , far more than chip availability. Microsoft ( NASDAQ:MSFT ) CEO Satya Nadella recently said, "compute is not the bottleneck, but energy and data center space is." Each additional unit of electricity directly correlates to the number of high-performance accelerators a data center can support, unlocking greater computational output and sales."

Nebius Group secured a significant position when Nvidia participated in a $700 million private placement, resulting in nearly 1.2 million shares valued at about $112 million. Core AI revenues increased roughly 400% year-over-year and 40% sequentially, which drove the stock to record highs before a subsequent 33% decline from the peak and a 20% drop in one week after a quarterly revenue miss. Near-term margins are strained by aggressive expansion investments. Energy capacity is identified as the primary constraint for AI data centers, and Nebius raised its contracted capacity target to 2.5 gigawatts by late 2026 to meet anticipated demand.

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