AI infrastructure skyrocketing by 6700%? What gives Nebius the audacity to be so bold?

Question

This year, the AI infrastructure sector has gone crazy. The Dutch Nebius Group ( NASDAQ: NBIS ) has risen by 202% this year but has recently fallen by 30%—should we buy the dip?

Numbers Speak

What does this company do? In simple terms, it rents GPUs to AI companies. In the first 9 months, revenue soared 437%, with Q3 quarterly earnings of 14.6 billion USD, a quarter-over-quarter explosion of 355%. It sounds off the charts, but it actually fell short of Wall Street expectations, causing the stock price to plummet.

But looking at the long-term data is heartbreaking:

Just signed a 5-year $3 billion order with Meta
Microsoft's contract is up to 19.4 billion USD
Q3 computing power is already full
It is expected that the annual revenue will reach 7-9 billion USD by the end of 2026.

What does this mean? If the revenue can really reach 8 billion by 2027 (taking the median), compared to 120 million in 2024, the increase is 6700%. Such growth rates for early-stage tech companies are almost unseen in the traditional stock market.

Where is the problem

Don't just focus on the growth rate, there are pitfalls in the details:

Huge losses: Burn cash like fire, and still need to raise 25 million shares of new stock.
Equity dilution risk: New shares depress earnings per share
Valuation Suspense: Valued using the annualized income method, the risk is extremely high.

Why it's still worth watching

The AI chip shortage has really not been resolved in recent years, with giants lining up for GPUs. If Nebius can truly expand production as planned, it will capture the entire cycle of AI infrastructure from “scarcity” to “ubiquity.” This is similar to the logic of Netflix, which rose 594 times after being recommended by Motley Fool in 2004, and Nvidia, which rose 1143 times after being recommended in 2005—positioning itself in the right track at the right time.

Bottom Line

Before buying the dip, ask yourself: Can you accept a 50% loss? Can you hold for 3-5 years? If you can, this stock has potential. If your mindset is weak, it's advisable to wait for more earnings reports to verify if the growth is real.

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