Analyst Hails Nebius Stock (NBIS) as the ‘270% Rocket Hiding in Plain Sight'

Business Insider

a day ago

Nebius Group (NBIS) has been a breakout star of 2025 within niche AI, soaring 170% year-to-date. Last week's Q2 2025 results were nothing short of staggering: revenue skyrocketed 625% year-over-year, while cost of revenues rose just 291% — a sign of explosive demand paired with disciplined cost control.
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Such figures need a moment of silence and reflection because this is the kind of growth investors look for without realizing it has always been there — while many market participants look without seeing, as they overlook the stock. Price charts tell the tale better than most.
The stock's total gain since its illustrious U.S. stock listing in October 2024 is now 270%. Beyond AI-focused cloud services, Nebius boasts diversification across EdTech, autonomous driving, and strategic equity stakes. This is a powerful, still under-the-radar AI play — and I remain firmly Bullish.
Q2 Results Changed the Paradigm
In its Q2 2025 report, management increased the annualized run-rate revenue (ARR) guidance for 2025 up to $900 million-$1.1 billion, up from $750 million-$1 billion previously. Management also said that the core AI infrastructure business achieved adjusted EBITDA positivity in the quarter, which was earlier than expected. For the whole company, slightly positive adjusted EBITDA is expected by year-end 2025, but still with a full-year loss.
The company is very well operated by CEO Arkady Volozh, who has led the company from its Russian Yandex search engine days to the new Western-focused AI services provider Nebius today. A 625% year-over-year revenue surge is incredible, and it shows just how small Nebius's revenue base was a year ago. Growth rates will obviously normalize over time, but we're still looking at triple-digit revenue growth rates for the next two years.
Profitability is obviously a bit more fickle at this stage, but the trajectory is intact. Property and equipment expenditures currently exceed operating cash outflow by a wide margin, and free cash flow will inevitably be negative until most of the company's data center build-out is complete.
Following the Q2 results, shares have surged by about 25%, signaling confidence in the market. In essence, this is an investment with intangible upside potential, and with the stock at 7.5% of my total portfolio value, I'm not looking to sell any time soon. I'm holding on for the ride.
Vertical Integration and Balance Sheet Strength Optimize Returns
Nebius is not your generic cloud provider; instead, it is purpose-built for AI workloads. With the company controlling its entire value chain for compute, storage, and software, it can allocate GPUs dynamically, squeeze more utilization from each server rack, and respond to customers' model-training needs faster than Big Tech companies burdened by a broad product mix.
The company's balance sheet is often overlooked—the company started 2025 with roughly $2.5 billion in cash and no debt, according to TipRanks data.
This liquidity comes mainly from its Yandex divestment and capital injections from Nvidia (NVDA), Accel, and Orbis. The Q2 balance sheet does show rising debt to about $978 million due to convertible bonds, but Nebius still has a strong cash position and more flexibility than its competitors. Meanwhile, rival AI-cloud startups like CoreWeave (CRWV) and Lambda Labs carry billions in debt. It would seem that Nebius has a strategic advantage and is pressing it home.
Strong Annual Returns Expected for NBIS
Nebius may be trading at a lofty price, but its momentum and growth trajectory suggest that strength is sustainable. While some investors might be tempted to take profits after the stellar Q2 report, I'm inclined to hold through any short-term volatility to capture substantial medium- to long-term gains.
Yes, the 14-day RSI above 75 points to short-term overvaluation, but with exceptional management and a track record that's likely to make strong earnings the rule rather than the exception, I see this as manageable. My base-case 12–18 month target is $80, with a bull-case target of $90. From the current $69 share price, that implies upside potential of 15.9% to 30.5%.
Is NBIS a Good Stock to Buy?
On Wall Street, Nebius has a consensus Strong Buy rating based on six Buys, one Hold, and zero Sells. The average NBIS stock price target of $69.67 indicates a 6.2% downside over the coming year.
Wall Street analysts are generally of the mind that NBIS may be overvalued. However, several analysts raised their price targets since the Q2 report in recent days, including Alexander Duval from Goldman Sachs and Hamed Khorsand from BWS Financial.
Nebius makes up 7.5% of my total holdings — a sizable position, but one I believe is fully justified. I trust management's vision, and the company's operations are perfectly aligned with the robust growth trajectory of AI.
With broad diversification, a strong balance sheet, and plenty of runway ahead, selling now would be a mistake. While short-term volatility is possible after the Q2 surge, I see it as temporary. In the medium term, this under-the-radar AI player is likely to deliver higher prices again and again.