Nebius Group, a neocloud provider, has seen its stock price skyrocket by 475% over the past year due to growing demand for its artificial intelligence (AI) data centers. However, with a high price-to-sales ratio of 114, some might think it’s in a bubble. But is this really the case?
Let’s look closer at Nebius’ valuation and key data points. The company’s revenue has been increasing rapidly, but its price-to-sales ratio is higher than its peers, including CoreWeave. However, there are several reasons why Nebius stock might not be in a bubble.
Firstly, Nebius has a significant backlog of contracts, which suggests that the company’s growth is sustainable. The Microsoft contract alone is worth $19.4 billion and will provide dedicated GPU infrastructure capacity over five years. This deal has the potential to boost Nebius’ growth and make it an attractive investment opportunity.
Additionally, there is a shortage of AI computing infrastructure in the cloud, which makes Nebius’ service in high demand. The company’s business model allows customers to rent its infrastructure on an hourly basis or purchase tokens for running AI inference applications, making it a flexible and attractive option for companies looking to invest in AI technology.
In fact, analysts expect Nebius’ top-line growth to take off, with some predicting a market cap of $84 billion if the company hits $4.4 billion in revenue in 2027. This would represent a potential jump of 180% from current levels, making it an attractive investment opportunity for those looking to buy a fast-growing AI stock.
In conclusion, while Nebius’ valuation might be high, its significant backlog of contracts and growing demand for its AI data centers suggest that the company is in a solid position. With the shortage of AI computing infrastructure and the flexibility of its business model, Nebius stock is still worth considering as an investment opportunity.
Source: https://www.fool.com/investing/2025/11/07/this-ai-stock-has-soared-475-but-heres-1-reason-wh