Morgan Stanley (MS) Stock: Nebius Gains Momentum as AI Compute Strategy Draws Support

Table of Contents

TLDR

Nebius Group’s stock rises after Morgan Stanley’s positive long-term AI outlook.
Morgan Stanley sees Nebius Group poised for growth despite short-term challenges.
Nebius Group benefits from AI infrastructure, but faces near-term financial hurdles.
Analyst optimism drives Nebius Group stock surge, targeting long-term AI potential.
Nebius Group’s AI cloud push gains confidence from Morgan Stanley’s “Equalweight” rating.

Nebius Group N.V. (NBIS) saw a notable surge in its stock price, increasing by 2.71% to $101.98 by 11:04 AM EST. This price spike followed a period of steady growth earlier in the day. The jump comes after a key recommendation from Morgan Stanley, where analyst Josh Baer initiated coverage on the stock with an “Equalweight” rating. The firm set a target price of $126 for the stock, underscoring its long-term potential in AI infrastructure.

NBIS Stock Card
Nebius Group N.V., NBIS

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Morgan Stanley’s View on Nebius Group

Morgan Stanley’s analysis highlights Nebius Group as a strong contender in the expanding AI infrastructure market. The firm sees potential for Nebius to scale rapidly, especially in the AI cloud sector. Baer points out that the company’s AI compute business could bring significant capacity online, helping the firm meet growing demand. While the analyst acknowledges that short-term performance could remain pressured due to high capital expenditure, the long-term outlook remains positive.

Baer also stresses that Nebius has a broad software platform and a diversified customer base, factors that contribute to the company’s future value. The firm believes Nebius is well-positioned to benefit from the build-out of AI infrastructure. Despite these promising factors, the company’s financial performance in the near term may struggle, particularly with high depreciation costs and free cash flow staying negative.

Concerns and Skepticism About Nebius’ Targets

Some analysts have raised concerns about Nebius Group’s ambitious financial targets. The company has set an annual recurring revenue goal of $7-9 billion for Q4 2026, a figure that some analysts view as overly optimistic. The company’s projections have faced skepticism, with questions surrounding how it will outperform expectations amid rising depreciation.

Analysts have pointed out that Nebius’ EBIT (earnings before interest and taxes) is likely to remain pressured due to its heavy capital expenditures. Although the company’s AI infrastructure plans are impressive, they come at a steep cost, which could weigh on its short-term results. The mix of high capital expenditure and increasing depreciation may delay the realization of profitability in the near future.Suggest 5 catchy titlws fir the content above.Starting with this words….Morgan Stanley (MS) Stock:…