Nebius Stock's Sharp Decline and Rebound: What Investors Should Know

The Rollercoaster Week

Nebius Group (NASDAQ: NBIS) experienced significant volatility this week, with shares plunging nearly 15% before staging a recovery to close just 2% above the previous Friday’s level. The dramatic price swing reflects broader investor concerns about whether AI cloud infrastructure companies can deliver on their aggressive revenue projections.

At the center of this uncertainty is whether Nebius and its peers can actually convert their substantial contract backlogs into realized revenue. The stock’s trajectory—sharp decline followed by rebound—demonstrates how sensitive the market is to both risk signals and positive catalysts within this emerging sector.

Why the Initial Selloff Hit Hard

The early-week downturn wasn’t random. Investors grew increasingly anxious about mounting debt loads across AI infrastructure providers expanding to meet surging demand. The sector’s financial fragility became impossible to ignore.

Nebius’s Position Relative to Peers

Here’s where context matters: Nebius maintains a stronger balance sheet than some competitors. Unlike certain rivals who have accumulated substantial debt burdens to fund infrastructure expansion, Nebius still carries negative net debt—meaning it holds more cash than debt obligations. This distinction proved meaningful as panic selling swept through the sector.

CoreWeave, another prominent player in AI cloud infrastructure, exemplifies the debt concerns that spooked markets. The contrast between Nebius’s more prudent financial management and CoreWeave’s aggressive leverage highlighted which companies could weather extended spending cycles and which faced potential stress.

The Catalyst for Recovery

The rebound gained momentum when Citigroup issued a “buy” rating with approximately 100% upside projection for CoreWeave on Thursday evening. While this might seem to validate the high-debt model, it actually signaled to investors that sector growth remains intact—and that companies with superior financial positions, like Nebius, could capitalize on this expansion without the same leverage risks.

The sector-wide rally that followed reflected renewed confidence that AI infrastructure spending will persist, bolstering sentiment across the category.

The Real Risk Lurking Ahead

Yet the current valuation rests on a critical assumption: Nebius must achieve its guidance of reaching a $7 billion to $9 billion annual revenue run rate by the end of 2026. This represents an ambitious ramp from the projected $1 billion run rate at the close of the current quarter.

Customers have committed to multi-year agreements worth billions, but corporate spending patterns can shift quickly. If major clients reduce their AI infrastructure investments—whether due to competitive pressures, over-capacity, or a broader economic slowdown—Nebius’s revenue targets could miss materially. Such a development would likely trigger another sharp decline in the stock.

The Bottom Line

Nebius’s rebound this week shouldn’t be interpreted as an all-clear signal. The company does possess better financial fundamentals than certain competitors, and sector tailwinds appear intact. However, investors must recognize that valuations now embed very specific assumptions about customer spending continuation and revenue growth acceleration.

The path forward depends less on Nebius’s operational capabilities and more on whether the AI infrastructure spending cycle can sustain the growth trajectory the market currently prices in. Until that plays out, expect continued volatility around earnings reports and customer commentary.