Nebius Emerges as Top AI Stock After Strong Q3 Growth
Nebius Group N.V., trading under the ticker NBIS, has recently captured investor attention following its impressive third-quarter earnings report. The company has been favored over CoreWeave, largely because of a cleaner balance sheet, expanding profit margins, and a clear trajectory toward long-term profitability. In Q3 alone, Nebius reported a staggering 355% year-over-year revenue growth, driven by strong demand and limited available capacity. Management responded by significantly raising guidance for both long-term annual recurring revenue and expansion capacity, signaling strong confidence in future growth.
By comparison, CoreWeave also delivered strong revenue and earnings beats in the quarter, but it faces headwinds in the form of margin compression, supply chain delays, and a substantial debt load. These challenges have led CoreWeave to cut both guidance and capital expenditures, leaving it at a disadvantage relative to Nebius. Despite CoreWeave’s large backlog, Nebius’s stronger financial position, robust growth trajectory, and improving margins make it the more compelling investment in the AI infrastructure sector. Analysts see Nebius stock as having up to 75% upside over the next two years, with a "Buy" recommendation, while CoreWeave is viewed as a "Hold."
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Nebius has also secured several high-profile contracts that have bolstered its position. A five-year agreement with Meta Platforms, valued at around $3 billion, was announced recently, limited only by the company’s current capacity. This follows a massive September deal with Microsoft worth between $17.4 billion and $19.4 billion. Revenue from these deals is expected to ramp up significantly next year. Furthermore, Nebius’s autonomous driving subsidiary, Avride, gained a strategic investor in Uber Technologies, strengthening its commercial partnerships.
However, investors are being advised to watch the company’s net losses closely. Nebius reported a $119.6 million loss in Q3, up from $43.6 million a year earlier, with further losses anticipated due to aggressive expansion. The company is scaling up its data centers in Finland, the U.K., Israel, and potentially the U.S. This expansion involves significant investments, including new GPU deployments and securing additional sites with high power capacities. Financing will come through a combination of debt, asset-backed financing, and equity issuance, which could dilute existing shares.
Despite these risks, Nebius is positioned to continue its rapid revenue growth as AI demand increases. While profitability remains a future challenge and valuation multiples are high, the market believes there is still room for the stock to run. For growth-focused investors, Nebius represents a high-potential opportunity, especially compared to peers like CoreWeave. As long as AI demand continues to surge, Nebius seems poised to remain a dominant player in the sector.
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