Nebius Group (NBIS) experienced a turbulent July, with shares falling 31.1% over the month. The decline was exacerbated by a 13.29% single-day drop triggered when hedge fund manager Michael Burry — widely known for his contrarian bet against the US housing market ahead of the 2008 financial crisis, later depicted in The Big Short — disclosed a short position in the AI cloud infrastructure company.

Despite the July sell-off, NBIS remains up 125% year-to-date in 2026. The stock recently closed at $187.97, within a 52-week range of $62.01 to $299.86, giving it a market capitalization of approximately $47 billion.

Burry's short disclosure intensified ongoing scrutiny of Nebius' data center expansion strategy and whether its current valuation is justified. The company, which emerged from the restructuring of Russian technology firm Yandex and is led by founder Arkady Volozh, has positioned itself as a pure-play AI compute provider at a time when enterprises and research labs are scaling demand for GPU-backed cloud services. Analysts at Simply Wall St estimate the stock's fair value at $245.43, implying it may be undervalued by roughly 22.6% at recent prices. That assessment, however, depends heavily on Nebius sustaining its rapid growth trajectory in a market where hyperscalers including Amazon Web Services, Microsoft Azure, and Google Cloud are simultaneously investing tens of billions in their own AI infrastructure.

At current levels, the stock trades at a price-to-earnings ratio of 66.1x — more than double the US Software industry average of 31.4x and above the peer average of 39.4x.

Revenue Growth and Expansion

Nebius reported a dramatic revenue increase in the first quarter, with revenue surging from approximately $50 million a year earlier to $400 million year-over-year, reflecting the broader wave of enterprise demand for AI training and inference capacity.

The company has also been rapidly scaling its contracted power capacity. Since last August, projections have grown from a minimum of 1 GW to over 4 GW. Nebius has secured up to 1.2 GW of power and land for a new AI factory in Pennsylvania.

However, expansion at this scale carries significant costs. Nebius spent approximately $2.5 billion in Q1 alone, primarily on GPUs and GPU-related hardware. Management identified rising co-location costs, operating lease expenses, and recruitment as key cost drivers.

Capital Raises

In mid-July, Nebius raised $775 million in debt financing to fund further expansion. This came on top of a $6.3 billion capital raise in Q1, which included a $2 billion equity investment from Nvidia and $4.3 billion from convertible securities. Nvidia's backing places Nebius alongside companies such as CoreWeave in a cohort of specialized AI cloud providers that have leveraged partnerships with the chipmaker to secure both capital and GPU supply.

The magnitude of capital deployment raises questions about whether revenue growth can keep pace with spending. With the stock trading at roughly 14 times forward sales, the valuation premium leaves little room for error. Any indication that customers are scaling back cloud capacity commitments could put additional pressure on the share price.

Q2 Earnings Ahead

Attention now turns to Wednesday, August 12, when Nebius is scheduled to report its Q2 earnings results. Investors will be closely monitoring updates on compute capacity growth, the customer pipeline, and whether the cost pressures seen in Q1 have moderated.