Nebius: Wait For The Bubble To Burst First

(9min)

Summary

  • Nebius Group staged a dramatic recovery, fueled by strong Q1 results, AI enthusiasm, and ambitious ARR and CapEx targets, but much upside is already priced in.
  • Nebius Group is aggressively scaling AI infrastructure with Nvidia partnerships and targeting 'frontier AI companies,' yet hasn't seen material gains from these players.
  • NBIS's high CapEx, ongoing losses, and premium valuation (EV/sales 14.7x) raise concerns about cash flow, sustainability, and future profitability.
  • Despite AI sector tailwinds, I argue why NBIS's risk/reward profile is unattractive at current levels.
  • Even for speculative investors, playing the AI game with NBIS at the current levels might not be worthwhile until the bubble implodes.
  • Looking for a helping hand in the market? Members of Ultimate Growth Investing get exclusive ideas and guidance to navigate any climate. Learn More »

artificial intelligence bubble street sign

franckreporter

I get it. Some perma-bulls of Nebius Group N.V. (NASDAQ:NBIS) might point to my previous caution on NBIS as somewhat “short-sighted,” even though the stock did collapse more than 35% from my previous article in March, before the April bottom

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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