Prediction: Nebius Stock Will Surge 95% in a Year, According to Wall Street. Should You Buy It Before Nov. 12?

Neocloud infrastructure provider Nebius Group (NASDAQ:NBIS) has witnessed a turbulent time on the stock market in recent months, with shares of the company dropping 50% since reaching a 52-week high on June 22.

The sharp decline in Nebius can be attributed to the declining confidence in artificial intelligence (AI) stocks lately. Hotter-than-anticipated inflation, the high cost of borrowing to fund the AI infrastructure build-out following the Federal Reserve's September interest rate hike, and concerns about the viability of huge investments in AI data centers have taken a toll on AI infrastructure stocks in recent months.

Nebius has been caught in this negativity as well. However, things could change when Nebius releases its third-quarter results on Nov. 12. Let's look at the reasons why Nebius' fortunes can change next week.

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Nebius' smart business strategy could help it deliver stronger-than-expected results

Nebius builds and rents out dedicated AI data centers equipped with high-performance accelerator chips. However, this is just one side of its business. The company also provides a software stack that helps clients move AI applications into production by giving them access to a wide range of AI models.

So, Nebius customers can not only rent computing capacity from the company but also use its software suite to build and deploy AI agents, run inference applications, and test and verify AI systems in virtual environments before deployment. This full-stack nature of Nebius' cloud infrastructure platform is a good thing, as the growing usage of AI tokens on its platform will boost its bottom-line performance in the future.

Not surprisingly, Nebius reduced its adjusted net loss by 64% year over year in Q2 to $33.2 million. Also, the incredible demand for its AI cloud infrastructure solutions led to an increase of over 5.5x in revenue in Q2 to $582.3 million. Also, the company is on track to receive $9 billion in upfront funding in 2026, which should ease pressure on its cash flow and balance sheet as it builds more AI data centers.

Nebius noted on its August earnings call that 70% of the deals it closed in the second quarter included prepayment terms. Also, the company is on track to receive $9 billion in upfront funding in 2026, which should ease pressure on its cash flow and balance sheet as it builds more AI data centers.

Additionally, the average size of Nebius' data center contracts indicates that it can spring a positive surprise when it reports results on Nov. 12. Nebius points out that it is charging $20 million to $25 million per megawatt (MW) of data center capacity annually for mid-term contracts that run for one to three years. Meanwhile, short-term deals of up to six months carry a rent of $40 million to $50 million per MW a year.

Now, building a dedicated AI data center reportedly costs $18 million per MW, according to consulting firm Turner & Townsend. So, Nebius can generate robust profitability and cash flow amid healthy demand for AI computing infrastructure, which is allowing it to charge high rents.

Additionally, the company is covering 50%-60% of its capital expenditure through upfront customer payments, while the asset-light software side of the business is set to be another tailwind for its balance sheet. In fact, Nebius' adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) landed at $236.2 million in Q2, a big swing over the year-ago period's loss of $21 million.

So, the signs are positive for Nebius ahead of its quarterly report, and the stock's valuation suggests buying it could be a smart move before Nov. 12.

Nebius' cheap valuation and solid upside potential make it worth buying ahead of its quarterly report

Nebius trades at 29 times sales, which is less than half its sales multiple at the end of 2025. The sales multiple may seem high at first, but we have already seen the company's top line growing exponentially.

Analysts expect the company's top line to jump by 531% this year to $3.35 billion. Even better, the forecast for the next couple of years suggests that Nebius' revenue could increase by 7x in a short period.

NBIS Revenue Estimates for Current Fiscal Year data by YCharts

Nebius, therefore, can justify its valuation. That explains why Nebius' 12-month median price target of $276 implies 95% upside, according to 26 analysts covering this AI stock. However, Nebius can exceed that price target over the long run. Assuming Nebius trades at even 5 times sales, in line with the tech-laden Nasdaq Composite index, and its 2028 revenue lands at $22.91 billion, as seen in the chart above, its market cap could reach $114 billion.

That's 196% higher than Nebius' current market cap. So, there is a strong bull case for investing in Nebius stock right now, and doing so before its quarterly report seems like the right move, as its smart business model could help it beat consensus expectations and jump higher.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.