Nebius (NBIS) Q3 2025 Earnings Analysis: Strong Fundamentals vs. Market Sentiment Disconnect

This analysis is based on market reports covering Nebius Group N.V.'s Q3 2025 earnings announcement on November 11, 2025 [1][2]. The company delivered exceptional fundamental performance with 355% year-over-year revenue growth to $146.1 million, coupled with a landmark $3 billion partnership with Meta Platforms for AI infrastructure delivery over five years [1][2]. Despite these strong results, the stock experienced significant selling pressure, declining approximately 19% over November 11-12, 2025 [0].

The market’s negative reaction creates a compelling disconnect between fundamentals and sentiment. While revenue growth accelerated to 39% sequentially and the net loss shrank dramatically from $100.4 million to $39.7 million year-over-year [2], investors appear focused on execution challenges. The company now faces the monumental task of delivering on over $20 billion in contracted revenue from Microsoft ($17.4-19.4 billion) and Meta ($3 billion) deals [1][2].

Nebius has established itself as a critical AI infrastructure provider for hyperscale customers. The company’s annualized run rate reached $551 million at end of September [1], with management narrowing 2025 revenue guidance to $500-550 million and projecting 2026 ARR of $7-9 billion (more than half already booked) [1]. The core infrastructure business margin expanded to nearly 19% adjusted EBITDA [1], demonstrating improving operational efficiency.

However, the massive scale of contracted revenue requires substantial capital investment. Management raised 2025 CapEx guidance from $2 billion to $5 billion [1], creating potential dilution risk through an announced at-the-market equity program for up to 25 million shares [1]. The company maintains $4.8 billion in cash providing substantial runway [1], but the path to profitability remains challenging with a current P/E ratio of 122.55x [0].

: The stock’s decline despite exceptional fundamentals suggests investors may be pricing in execution risk after a 400%+ year-to-date rally [2]. The market appears to be applying a “show me” approach to management’s ability to deliver on transformative contracts.

: Nebius has successfully emerged as a third major AI infrastructure provider alongside established cloud giants. The Microsoft and Meta partnerships validate the company’s technical capabilities and provide visibility into future growth, with management stating demand was “overwhelming” and limited only by available capacity [1].

: With 100% analyst coverage at Strong Buy ratings and a consensus price target of $101.00 (7% upside from current levels) [0], the stock faces high expectations. The current pullback may reflect concerns about whether the premium valuation can be sustained through the execution phase.

• Execution Risk
  : Delivering on $20+ billion in contracts requires unprecedented operational scaling in AI infrastructure deployment [1][2]
• Capital Dilution
  : The $5 billion CapEx requirement and equity program could significantly dilute existing shareholders [1]
• Customer Concentration
  : Heavy reliance on Microsoft and Meta represents substantial concentration risk if either partner reduces commitments
• Competitive Pressure
  : Established cloud providers and other AI infrastructure specialists may intensify competition

• Strategic Positioning
  : Nebius has secured a foothold in the AI infrastructure arms race with two of the world’s largest tech companies
• Demand Visibility
  : With over half of 2026’s $7-9 billion ARR target already booked, growth trajectory appears well-defined [1]
• Margin Expansion
  : Adjusted EBITDA margins are expanding as revenue scales, suggesting path to profitability [1]
• Market Leadership
  : Early mover advantage in specialized AI infrastructure for hyperscale customers

Nebius reported Q3 2025 revenue of $146.1 million (355% YoY growth) with improving profitability metrics and announced a $3 billion Meta partnership, adding to existing Microsoft contracts totaling $17.4-19.4 billion [1][2]. The stock declined 19% post-earnings despite these strong fundamentals, with trading volume surging to 45.3 million shares on November 11 and 35.5 million on November 12 versus 18.0 million average [0].

The company maintains Strong Buy consensus from analysts with price targets suggesting 7% upside from current levels [0], while holding $4.8 billion in cash to support expansion [1]. Management raised 2025 CapEx guidance to $5 billion and announced equity financing programs to support growth [1]. The fundamental growth story remains compelling with 2026 ARR targets of $7-9 billion, but execution risk and valuation concerns create significant volatility potential [0][1][2].