Key Takeaways
- Nebius (NBIS) shares increased approximately 2% during Wednesday’s premarket session.
- William Blair launched coverage with an Outperform rating, describing Nebius as distinct from typical neocloud competitors.
- This positive initiation comes after BNP Paribas upgraded the stock last week with a $399 price target.
- BNP Paribas estimates Nebius could reach approximately $22 billion in annual recurring revenue by late 2027.
- The company plans to increase pricing for certain Nvidia GPU offerings effective October 1.
Shares of Nebius Group NV Class A advanced nearly 2% in premarket activity on Wednesday following William Blair’s decision to initiate coverage of the AI cloud infrastructure provider with an Outperform rating.
In his research note, analyst Jason Ader highlighted what differentiates Nebius from competing AI infrastructure companies. He emphasized the firm’s extensive infrastructure footprint, advanced software stack, established client base, and favorable access to financing.
Ader characterized Nebius as more than just another entrant in the neocloud space. He suggested that the market hasn’t yet fully priced in the company’s potential for long-term profitability.
This optimistic assessment from William Blair arrives on the heels of BNP Paribas’s positive revision on September 24. The French bank elevated Nebius from Neutral to Outperform.
BNP Paribas simultaneously increased its price objective to $399, up from $260. The firm noted that Nebius’s prospects have significantly strengthened since initial coverage began in June.
Strong Revenue Trajectory Supports Bullish Outlook
According to BNP Paribas forecasts, Nebius could achieve nearly $22 billion in annual recurring revenue by year-end 2027. Analysts anticipate that forthcoming 2027 guidance from the company will likely prompt upward revisions across Wall Street estimates.
For the second quarter, Nebius delivered revenue of $582.3 million. This represented a remarkable 454% surge compared to the same period last year.
The company’s adjusted EBITDA transformed from a $21 million deficit to positive earnings of $236.2 million. Meanwhile, adjusted net losses contracted by 64% year-over-year to $33.2 million.
Management characterized the second quarter as the company’s strongest commercial performance to date. Nebius secured four significant AI cloud contracts, each averaging more than $1 billion in total contract value.
Among these agreements, the five-year partnership with Meta Platforms could generate up to $27 billion. In July, Nebius disclosed it had secured over $40 billion in additional contracted revenue from investment-grade clients, including both Microsoft and Meta.
Financing Initiatives and Pricing Strategy Support Growth Plans
To support its expansion roadmap, Nebius completed a $5.75 billion convertible-note offering in August. The company simultaneously unveiled plans for a $10 billion AI factory development in Finland.
Beginning October 1, Nebius will implement price increases across select Nvidia GPU configurations within its cloud infrastructure. Some market observers interpret this pricing action as evidence that customer demand for computing resources continues to exceed available capacity.
Earlier in September, Palantir designated Nebius as its preferred sovereign AI infrastructure collaborator. This partnership will enable qualified Palantir clients to leverage Nebius’s compute and inference infrastructure.
However, not all market participants share the bullish sentiment. Investor Michael Burry has transformed his short exposure in Nebius into put options with expiration dates before mid-2027, positioning this as part of a broader hedge against potential AI sector overvaluation.
Despite this contrarian positioning, the stock has maintained its upward trajectory. Nebius currently trades substantially above its 52-week low of $73.52, though it remains below its 52-week peak of $299.86.
Wall Street Journal data indicates the consensus recommendation on Nebius stock is overweight. The stock has accumulated 14 buy ratings, one overweight rating, seven hold ratings, one underweight rating, and one sell rating from analysts.
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