Nvidia-backed Nebius Group stock jumped in Tuesday trading after the AI cloud-computing provider published its first quarter results in the morning.
The company recorded $55.3 million in revenue for its March-ended quarter, a 385% year-over-year increase. But Nebius posted a net loss of $92.5 million, up from a $77.6 million loss for the same period a year earlier.
The company is investing to build out data center capacity and software capabilities to serve AI demand from enterprises. It is looking carve out some market share from cloud leaders such as Amazon and Microsoft, while competing with larger so-called neoclouds like the recent IPO stock CoreWeave.
Nebius is "on-track" to achieve its previous guidance of $750 million to $1 billion in annual recurring revenue, Chief Executive Arkady Volozh said in a letter to shareholders. The company also expects to turn adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) positive before the end of the year, according to the letter.
The firm's adjusted EBITDA loss for Q1 was $62.6 million, narrowing from a $71 million loss a year earlier.
Following the report, D.A. Davidson analyst Alexander Platt upped his price target for Nebius stock to 50 from 45 and reiterated a buy rating.
Platt called the results a "solid (first quarter) earnings that were underscored by continued growth in the core business and data center footprint expansion."
On the stock market today, Nebius stock is up more than 5% at 39.56.
Nebius' Nvidia Backing
Nebius stock restarted trading on the Nasdaq last October, following a nearly three year hiatus. The stock has coverage from just four analysts, according to FactSet.
Amsterdam-based Nebius rebranded itself from the name Yandex last year. Its previous holdings included Russia's leading Yandex search engine. Yandex stock was suspended in 2022 as part of sanctions on Russia-affiliated companies following Russia's invasion of Ukraine. Nebius sold off all its businesses in Russia in 2024 through a $5.4 billion deal and reemerged under the new name.
In December, Nebius announced it has raised $700 million through a private placement from a group of investors that included Nvidia. Nvidia disclosed its Nebius stake in a securities filing earlier this year.
Nebius last year announced plans to invest $1 billion in developing AI-related infrastructure in Europe. Nebius is also expanding to the U.S., including data centers in Kansas City and New Jersey.
The company expects to reach 200 megawatts of data center capacity by the end of the year, according to its investor letter.
"Delivering on our rapid growth plans will continue to require considerable investment," Volozh wrote to shareholders on Tuesday. But he said the company's funding from the divestment and $700 million private placement puts Nebius in a "uniquely favorable position to fund our growth."
Along with the AI infrastructure business, Nebius Group included autonomous vehicle developer Avride, education technology company TripleTen and Toloka, a data software company focused on AI.
Nebius Stock: Up 42% This Year
Nebius stock has performed well this year, up 42% year-to-date. Shares are below record highs near 50 that Nebius hit in mid-February, however. The stock slumped along with the broader market in March and early April before bouncing back. The stock is up a whopping 72% since the start of the month.
That gives Nebius stock a Relative Strength rating of 96 out of a best-possible 99, according to IBD Stock Checkup.
However, Nebius stock's 21-day ATR is on the high side at 7.7%. ATR, or average true range, is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's movement. Stocks that tend to make large jumps or dives in daily action have a high ATR. Stocks that tend to make more incremental moves have lower ATRs. With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
