July proved a turbulent month for Nebius Group (NBIS), the artificial intelligence cloud infrastructure provider, as its share price fell 31.1% over the course of the month. The steepest single-session drop came when the stock plunged 13.29% in one day following the disclosure that hedge fund manager Michael Burry had established a short position against the company.

Burry, best known for his contrarian bets against the U.S. housing market ahead of the 2008 financial crisis — chronicled in Michael Lewis's The Big Short — has developed a following among retail investors who track his filings for signs of froth in high-flying sectors. His position against NBIS landed amid a broader debate over whether AI infrastructure spending has outpaced near-term demand.

Despite that pullback, NBIS shares maintain a 125% year-to-date gain for 2026. Recent trading placed the stock at $187.97, within a 52-week range of $62.01 to $299.86, with a market capitalization near $47 billion.

Burry's bearish wager amplified existing concerns about Nebius' aggressive data center expansion strategy and whether the company's current valuation is sustainable.

According to research from Simply Wall St analysts, the fair value target for NBIS stands at $245.43, implying roughly 22.6% upside from recent trading levels. That estimate hinges heavily on Nebius' capacity to sustain rapid growth in the AI computing infrastructure sector.

The stock trades at a P/E multiple of 66.1x — more than double the 31.4x US Software sector average and above the 39.4x peer group median.

Exceptional Revenue Expansion

Nebius reported first-quarter revenue of approximately $400 million, up sharply from around $50 million in the same period a year earlier. The company has also significantly expanded its committed power capacity, with projections rising from a baseline of 1 GW last August to more than 4 GW currently. Nebius has secured as much as 1.2 GW of electrical power and real estate for a forthcoming AI facility in Pennsylvania.

That growth has required substantial capital investment. Nebius deployed approximately $2.5 billion during Q1 alone, primarily on GPUs and related hardware. Company leadership cited rising co-location costs, operating lease commitments, and staffing expenses as the main expenditure categories.

Significant Capital Infusion Raises Stakes

In mid-July, Nebius raised $775 million through debt financing to support its continued expansion. This followed a $6.3 billion capital raise in Q1, which included a $2 billion equity investment from Nvidia and $4.3 billion from convertible instruments.

Nebius is one of several companies positioning themselves as specialized providers of GPU-backed cloud capacity for AI workloads, competing for tenant commitments against larger hyperscalers — Amazon Web Services, Microsoft Azure, and Google Cloud — as well as newer entrants. Nvidia's equity stake gives the chipmaker a financial interest in the success of one of its infrastructure customers, while also deepening the relationship between the two companies.

Trading at roughly 14 times projected sales, the valuation is not inexpensive. Any sign that customers could slow their cloud infrastructure commitments may add further downward pressure on the shares.

Attention now turns to Wednesday, Aug. 12, when Nebius is scheduled to release its second-quarter financial results. Market participants are looking for updates on computing capacity expansion, customer acquisition trends, and whether the cost pressures seen in Q1 have eased.