Nebius stock (NASDAQ: NBIS) rally has hit a speed bump, with shares retreating sharply after a spectacular run that saw the AI infrastructure provider become one of the year’s standout performers.
This pullback follows an extraordinary surge that saw Nebius shares soar from around $14 in late 2024 to a 52-week high of $141.10 in early October 2025, representing gains of over 900% for early investors.
The recent decline has prompted a critical question among investors: can the company’s multi-billion-dollar Microsoft partnership and aggressive expansion plans sustain the momentum, or has the stock simply run too far, too fast?
Nebius stock: Microsoft deal fuels explosive growth trajectory
The catalyst behind Nebius stock’s explosive ascent was undoubtedly its landmark agreement with Microsoft, announced in early September 2025.
The multi-year contract, valued at $17.4 billion with potential expansion to $19.4 billion, will see Nebius deliver dedicated GPU capacity to Microsoft from its new data centre in Vineland, New Jersey, beginning later this year and continuing through 2031.
The deal represents one of the largest AI infrastructure agreements ever signed and immediately sent Nebius shares soaring nearly 50% on the announcement day alone.
Beyond the headline-grabbing Microsoft partnership, Nebius has demonstrated impressive operational momentum.
The company reported second-quarter 2025 revenue of $105.1 million, representing a staggering 625% year-over-year increase and more than double its first-quarter performance.
Nebius also achieved positive adjusted EBITDA in its core AI infrastructure business ahead of schedule, signalling improving operational efficiency despite aggressive expansion.
Management subsequently raised its annualised run-rate revenue (ARR) guidance to $900 million to $1.1 billion for the end of 2025, up from the previous range of $750 million to $1 billion.
Valuation concerns and profitability challenges Cloud Outlook
Despite the impressive growth metrics and major contract wins, significant concerns have emerged regarding Nebius’s valuation and path to sustained profitability.
The company currently trades at a price-to-sales ratio of approximately 28 based on its expected ARR of around $1 billion, with a P/E ratio of 123.35, valuations that suggest investors are pricing in extraordinarily optimistic growth scenarios.
While revenue has exploded, Nebius remains unprofitable, reporting a net loss of $91.5 million in the second quarter of 2025, widening from a $61.6 million loss a year earlier.
The company’s trailing twelve-month EPS stands at -$0.57, though analysts expect losses to moderate to -$0.80 per share in 2026 from -$1.10 currently.
The rapid stock appreciation has raised red flags among some market observers who fear Nebius exemplifies the speculative excess characteristic of an AI bubble.
On October 17, 2025, shares plunged 7.8% as headlines specifically targeted unprofitable AI infrastructure companies, with Nebius frequently cited as a prime example of hype-driven valuation.
The stock’s extraordinary 285% year-to-date gain and nearly 400% increase since the Microsoft deal announcement have left it vulnerable to sharp corrections when market sentiment shifts.
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