Nebius stock price is firing on all cylinders: brace for a retreat

Nebius stock price has staged a strong comeback in the past few months. It jumped from a low of $14.27 in 2024 to a high of $115, bringing its market capitalization to over $28.25 billion, up from last year’s low of $3.33 billion. Does it have more upside?

Nebius is benefiting from AI tailwinds

Top consulting companies have published reports that are highly supportive of the data center industry. In a recent note, Bain noted that the industry will spend trillions of dollars on infrastructure by 2030. 

McKinsey, on the other hand, expects that data center spending to hit $7 trillion in this period. This spending surge will happen because of the surging demand for computing power as AI models get more complex. 

Therefore, companies like Nebius, IREN, and CoreWeave stand to benefit from these tailwinds. This explains why they have moved from relatively small companies to multi-billion-dollar giants. 

Nebius is now a company worth over $30 billion, while CoreWeave’s market capitalization has soared to $63 billion. Most recently, IREN has come from ‘nowhere’ to become a $12 billion juggernaut. 

Nebius stock price jumped recently after it inked one of the biggest deals in the AI industry. This deal, worth about $19 billion, will see the company provide Microsoft with additional computing power from its New Jersey location in the next five years. 

This deal benefits Nebius by having a blue-chip company like Microsoft purchasing most of its storage for five years, with the potential for extension. 

At the same time, the deal means that the company will likely attract more companies like AI labs and big tech firms. For example, a company like Apple that has lagged behind AI spending could opt to use Nebius data centers instead of buying its own. 

Revenue growth to accelerate

The recent deal with Microsoft will help it to accelerate its revenue growth in the coming years. Its recent results showed that its revenue rose by 625% in the second quarter to $105.1 million.

This revenue growth brought its six-month revenue to $156 million, up by 545% from the same period last year. This growth happened as the company added new clients like Mithril, SkyPilot, Lightning, and BaseTen. 

Analysts are upbeat that Nebius growth will continue. The average estimate of 6 analysts is that its revenue will reach $576 million this year, up by about 390% from what it made in 2024. 

The company will then cross the $1 billion revenue mark next year, when it is expected to generate over $1.68 billion. There are odds that the revenue will be much higher than these estimates, especially if it gets more large clients like Microsoft. 

The risk to investors, however, is that the company will need billions of dollars in capital expenses. To do that, it will need to raise substantial sums of money, mostly through dilutive equity sales.

Nebius stock price technical analysis

NBIS stock chart | Source: TradingView

The daily timeframe chart shows that the NBIS stock price has been in a strong bull run in the past few months. It has jumped from a low of $14.2 to $113. It recently moved above the important resistance level at $86.9, its highest point in November 2021. 

The stock remains above the 50-day and 100-day Exponential Moving Averages (EMA). This is risky as it means that the stock could go through mean reversion. 

The stock has also become highly overbought, with the Relative Strength Index and the Stochastic Oscillator soaring. Again, this means that the stock could pullback, potentially to the key support at $86, down by about 25% from the current level. This plunge will be bullish because it will be a break-and-retest pattern, which is a common continuation sign.

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