Nebius Group: AI Infrastructure Play Showing Explosive Growth Amid Market Pullback

The AI Infrastructure Boom Is Real

The artificial intelligence sector is experiencing unprecedented expansion, with the global AI market projected to reach $3.5 trillion by 2033 at a compound annual growth rate of 31.5%. Within this ecosystem, infrastructure providers like Nebius Group (NASDAQ: NBIS) are capturing enormous value by building the computational backbone that powers AI advancement.

Nebius Group, headquartered in Amsterdam, operates as a comprehensive AI infrastructure platform. The company designs and deploys data centers equipped with cutting-edge Nvidia graphics processing units, while simultaneously offering cloud software solutions that enable organizations to efficiently deploy and manage AI applications at scale. Nvidia itself maintains a strategic stake in the company, underscoring confidence in Nebius’s positioning.

Expansion Accelerating Beyond Expectations

The revenue trajectory tells a compelling story. Through the first nine months of 2025, Nebius reported revenue growth of 437% compared to the same period in 2024. Q3 specifically delivered $146 million in revenue, representing a 355% year-over-year increase—though this figure fell slightly below Wall Street’s consensus forecasts.

Current market dynamics show compute capacity at full utilization. The company’s infrastructure is operating at maximum allocation, signaling robust demand from enterprise clients. Management has outlined an ambitious roadmap: by the end of 2026, Nebius targets an annualized revenue run rate between $7 billion and $9 billion. If the company achieves the midpoint of this range by 2027, this would equate to a 6,700% revenue increase relative to 2024 levels.

Strategic Partnerships Validate the Model

Nebius’s market traction is reflected in major partnership commitments. Meta Platforms inked a $3 billion infrastructure deal spanning five years, securing AI computational resources for its development initiatives. Microsoft simultaneously committed to a multiyear agreement valued at up to $19.4 billion, establishing Nebius as a critical component of Microsoft’s AI service delivery strategy.

These cornerstone contracts represent validation from two of the world’s largest technology companies and provide revenue visibility for years ahead. The scale of these agreements indicates enterprise confidence in Nebius’s technical capabilities and operational reliability.

Stock Performance and Current Valuation

Despite robust operational metrics, Nebius stock has experienced volatility. The shares are currently trading over 30% below their mid-October peak, even as the stock maintains a 202% gain year-to-date. This pullback reflects investor concerns including announced share issuance plans (up to 25 million shares) and the company’s ongoing losses as it scales infrastructure buildout.

The near-term equity dilution is a legitimate consideration for current and prospective shareholders. However, the fundamental question is whether the scale of revenue growth justifies the capital intensity and temporary losses characteristic of infrastructure companies in early-stage hypergrowth phases.

Why This Pullback Could Present Opportunity

From a risk-reward perspective, the deterioration in valuation creates a more attractive entry point for investors with a multi-year horizon. The company’s compute capacity constraints—operating at full utilization—suggest that revenue growth will remain capacity-constrained rather than demand-constrained in the near term. This is a favorable dynamic for pricing power.

The mega-contracts with Meta and Microsoft provide predictable revenue streams and reduce execution risk. If Nebius successfully executes its expansion plans and achieves management’s 2026 targets, the current pullback represents a buying opportunity rather than a warning sign.

For investors seeking exposure to AI infrastructure—one of the foundational investment themes for this decade—Nebius’s current valuation offers a more balanced risk-reward profile than three months ago.