Key Takeaways
- Nebius Group shares soared 34% following Q2 results showing revenue of $582.3 million, representing a 454% year-over-year increase
- On the same day as the earnings release, Michael Burry expanded his short position, describing Nebius as exemplifying “what the top of a boom looks like”
- Burry’s initial short disclosure came on August 6 when shares traded around $212; with the stock closing near $259, his bet is currently losing money
- The investor’s thesis centers on depreciation methodology rather than market demand, arguing AI firms inflate earnings by extending equipment useful life assumptions
- The company finished Q2 holding $8 billion in cash with $2.2 billion in operating cash flow, while capital spending reached $5.7 billion
Shares of Nebius Group rocketed 34% higher on August 12 following the release of second-quarter financial results. The company reported revenue of $582.3 million, marking a 454% year-over-year climb and surpassing Wall Street’s consensus estimate of $572.75 million.
The impressive performance failed to sway Michael Burry’s conviction. The founder of Scion Asset Management, who gained fame for accurately forecasting the 2008 financial crisis, increased his bearish wager on the very same day the company released its results.
Burry’s original short position disclosure came on August 6 when the stock was trading around $212 per share. Given the closing price near $259 on August 12, his current position sits in negative territory.
Breaking Down the Financial Results
Nebius, an AI cloud infrastructure provider powered by Nvidia chips and spun off from Russian tech giant Yandex with headquarters now in Amsterdam, delivered AI cloud revenue of $575 million, representing a 514% year-over-year expansion.
During the quarter, the company secured four separate agreements, each exceeding $1 billion in total contract value on average. New customer contract value expanded more than ninefold compared to the previous quarter.
Cash reserves stood at $8 billion at the end of June, with the company generating $2.2 billion in operating cash flow. Capital expenditures totaled $5.7 billion, exceeding analyst projections of $4.7 billion.
In the shareholder communication, CEO Arkady Volozh stated: “We could sell our entire 2027 capacity on these terms today.”
Management also increased its 2026 contracted power objective to 5 gigawatts from the previous target of 4 gigawatts.
The Depreciation Argument Behind Burry’s Short
Burry’s bearish position isn’t rooted in skepticism about market demand. Instead, his argument revolves around depreciation accounting practices employed by AI infrastructure providers.
He maintains that these businesses extend the projected useful life of processing chips that realistically need replacement every two to three years, a practice he believes artificially inflates reported profitability.
At the beginning of 2026, Nebius lengthened its server depreciation schedule from four years to five years. Burry has highlighted this type of adjustment as precisely the kind of change that enhances earnings metrics throughout the industry.
Second-quarter depreciation and amortization for Nebius totaled $259.7 million, representing 45% of revenue. Under GAAP accounting standards, the company recorded a $190.4 million loss during the period.
On August 12, Burry also expanded short positions in Micron and Oracle. His portfolio of short bets includes Nvidia, Palantir, Applied Materials, and Caterpillar.
CoreWeave shares climbed more than 19% on August 12 after the company raised its annual guidance, contributing to the broader AI infrastructure sector rally.
Trading around $259, Nebius carries a valuation of approximately 20 times this year’s revenue guidance range of $3.0 billion to $3.4 billion. The company also executed share sales totaling 12.7 million shares through June 30 at an average price of $223.60.
The critical question ahead is pricing sustainability. Nebius recently finalized its first short-term capacity agreement in early Q3, priced between $40 and $50 million per megawatt.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
