Key Points
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Nebius is growing quickly in a high-demand industry.
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Limited supplies of compute capacity and electrical power are among the factors dictating the pace of AI’s expansion, making Nebius’ assets more valuable.
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The company’s heavy debt load is a concern, but if it uses the cash it has raised to gain market share and land lucrative deals, it will give investors to reason look the other way.
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Michael Burry of The Big Short fame recently announced that he had opened a short position on Nebius (NASDAQ: NBIS), which is set to report earnings this week. While the artificial intelligence (AI) build-out is a major catalyst, Nebius’ high valuation and massive debt load have kept some investors away from the stock. But by making his negativity about the stock public, Burry has created more tension for shares.
Although Burry was depicted as a genius in print and on the big screen for anticipating the subprime mortgage crisis, he hasn’t gotten every investment call right. This may be one of his misses.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
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Nebius is in the right place at the right time
The rising use of artificial intelligence is being supported both by hyperscalers like Microsoft (NASDAQ: MSFT) and neoclouds like Nebius that can supply AI data centers, chips, and power. Previously existing data centers are limited in what they can do to support AI workloads, and while tech giants have been scrambling to build their own, specialists like Nebius have been finding customers for their compute power, too.
Meta Platforms (NASDAQ: META) is building a 5-gigawatt facility in Louisiana that will cost more than $50 billion. Microsoft is also working on its Fairwater AI data center, which is expected to be drawing 3.3 gigawatts of electricity by late 2027 — more than is used to power the city of Los Angeles.
Nebius is already deep into the process of developing multiple AI data centers, and it’s generating revenue from some of its facilities. As the company brings more of its compute capacity online, it will realize more revenue from long-term deals it has signed with Meta Platforms, Microsoft, and other tech leaders.
News from the memory chip market indicates that the data center build-out’s momentum is not expected to slow down anytime soon. SK Hynix (NASDAQ: SKHY) recently announced that it is investing $38 billion to build two new memory chip plants due to high and rising demand from the AI data center market. The pace at which new data centers are being built indicates that demand remains robust for compute power of the type that Nebius provides.
Addressing the neocloud’s debt
One of the main issues that understandably concerns potential investors in Nebius is how much money the company has borrowed to fund its own data center construction. The company’s long-term debt more than doubled sequentially from $4.1 billion in Q4 2025 to $8.4 billion in Q1 2026. That figure does not include the company’s $1 billion in long-term operating lease liabilities.
Yet its revenues surged by 684% year over year in the first quarter, reaching $399 million. Nebius is delivering substantial top-line growth, but it’s still reporting net operating losses. Investors must consider what type of growth rates they think would be necessary to justify the current stock price in the context of the company’s debt load.
On the bright side, all of that debt has left it with $9.3 billion in cash on its books — that figure, too, more than doubled sequentially. How effectively Nebius uses that cash will heavily determine whether its big bet on debt financing pays off. The expansive nature of the AI build-out suggests a positive outcome for the company is likely in the long run. While short-sellers might profit due to short-term volatility, the long-term picture for this neocloud is still solid.
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
