Why Nebius Stock Soared 25.5% Higher in August

Key Points

• Nebius raised what was already aggressive guidance for revenue growth.

• Nebius has a strong balance sheet that allows it to quickly grow AI infrastructure assets.

• It is in the process of quadrupling its data center capacity.

• 10 stocks we like better than Nebius Group ›

Nebius Group (NASDAQ: NBIS) stock has meandered for much of 2025. That's because the cloud computing and artificial intelligence (AI) infrastructure company's success hinged on its ability to generate soaring revenue sometime in the future.

The company may now be one step closer to that outcome after its second-quarter report released last month. The result has been a surge in the stock price. Nebius shares soared 25.5% in August, according to data provided by S&P Global Market Intelligence.

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A pullback in recent days, along with other tech stocks, might now be giving latecomers a good opportunity to participate in the next leg up, too.

Nebius is quickly building out infrastructure globally to support customer demand. Image source: Nebius Group.

Nebius forecasts explosive revenue growth

Nebius only reported $117.5 million in total revenue in 2024. Yet management was confident enough to tell investors to expect the business to attain annualized run rate revenue (ARR) of between $750 million and $1 billion by the end of 2025. At the high end, that implies quarterly sales of $250 million when all of 2024 saw revenue of only $117.5 million. Achieving that would be eye-opening for investors.

In its second-quarter report released last month, though, management actually boosted that already bold prediction. Nebius now sees ARR of $900 million to $1.1 billion at year-end. The stock rallied on that news.

Is it too late to buy Nebius?

Nebius also has a strong balance sheet with $1.68 billion in cash as of the end of Q2. It made a strategic financial decision to raise about $1 billion in convertible notes earlier this summer for added flexibility.

That puts Nebius in a good position to fund its capital expansion projects. The company is in the process of quadrupling its global data center capacity by the end of 2026. The Netherlands-based company has ongoing expansion projects in the U.S., Israel, Finland, and the U.K.

The optimistic revenue forecast by management has more investors interested in participating in that growth. But after the recent run, Nebius now has an enterprise value of over $15 billion. That's a rather high valuation based on 2025 sales. The company's ability to maintain that revenue growth will determine whether Nebius stock can still be a winning investment. With AI development still in its early stages, that seems like a reasonable bet.

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Howard Smith has positions in Nebius Group. The Motley Fool recommends Nebius Group. The Motley Fool has a disclosure policy.