Nebius Group Stock Looks Tempting -- but There's 1 Big Thing to Watch

Few stocks have been as hot as Nebius Group (NASDAQ: NBIS) in 2025. Shares of the artificial intelligence (AI) infrastructure company skyrocketed more than 5x before a recent pullback.

This high-flying AI stock looks tempting, especially for growth-oriented investors. But there's one big thing to watch with Nebius Group.

Lots of good news for Nebius Group

You won't have a hard time finding good news related to Nebius Group. As a case in point, the company just announced its second huge contract with a major hyperscaler. Meta Platforms inked a five-year agreement with Nebius valued at roughly $3 billion. Nebius CEO Arkady Volozh implied that the deal could have been even larger, writing to shareholders that "the size of the contract was limited to the amount of capacity that we had available."

The Meta agreement follows an even bigger deal with Microsoft announced in September that's valued between $17.4 billion and $19.4 billion. Volozh said in Nebius Group's third-quarter update that the company expects revenue from the contract to begin ramping up next year.

Nebius Group doesn't have to wait for its revenue to take off, though. It reported year-over-year revenue growth of 355% in Q3. The company projects an annualized revenue run rate of $7 billion to $9 billion by the end of 2026.

Again, Nebius Group's revenue could have been even greater if it had more capacity. The company sold out all of its available capacity in Q3, just as it has done throughout 2025.

There was also good news outside of Nebius' core AI infrastructure business. The company announced that Uber Technologies is a new strategic investor in Avride, Nebius Group's autonomous driving technology subsidiary. The two companies previously signed a multi-year commercial partnership agreement in 2024.

Image source: Getty Images.

One critical thing to watch

With all of this good news for Nebius Group, there's still one critical thing to watch: the company's mounting losses. Nebius posted a net loss of $119.6 million in Q3, compared to a loss of $43.6 million in the prior year period. The company's bottom line could deteriorate further as Nebius aggressively adds capacity.

The expansion of Nebius Group's Finland data center should be completed by the end of 2025. Nebius recently announced a deployment of Nvidia B300 GPUs in the U.K. It's launching Nvidia B200 GPUs in Israel. Further scaling up of data centers in the U.K. and Israel is on the way.

Nebius is working to secure more sites in the U.S. and Europe, some with hundreds of megawatts of power. The company has the option to boost its capacity in New Jersey by hundreds of megawatts as well.

All this added capacity will be expensive. Nebius plans to use three primary sources of financing to pay for the expansion. The company will add to its debt, which already tops $4 billion. It will pursue asset-backed financing. Nebius will also issue new shares, which will lead to a dilution in the value of existing shares.

The company is currently getting the ball rolling for the last financing method. Nebius announced that it's implementing an at-the-money (ATM) equity program to sell up to 25 million Class A shares. It will be able to tap into this ATM program as needed to obtain additional capital to increase capacity.

Is Nebius Group stock a buy?

Nebius Group is well-positioned to continue growing revenue at a fast pace as long as AI demand increases. I think that's a pretty good bet. Does that mean the stock is a buy? Not necessarily.

Sooner or later, Nebius Group needs to turn a profit. The stock's valuation could also be concerning to many investors, with a trailing 12-month price-to-sales ratio of 93. However, that multiple isn't as worrisome when you factor in Nebius' rapid growth.

I don't think this stock is a great pick for every investor. It's possible that Nebius Group's growth won't be as strong as anticipated. Still, Wall Street thinks the stock has plenty of room to run. I suspect that analysts are right.

Keith Speights has positions in Meta Platforms and Microsoft. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, Nvidia, and Uber Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.