Nebius (NBIS) Stock Tumbles: Investors Question Mega AI Deals Amid Sky-High Valuation

NBIS shares take a hit as the market scrutinizes eye-watering AI partnerships and a valuation that's looking increasingly detached from reality.

The AI Gold Rush Hits a Speed Bump

Nebius finds itself in the hot seat this week. Its stock price slid as investors finally paused their hype-induced buying frenzy to ask the tough questions. Those "mega AI deals" announced with much fanfare? Turns out signing massive contracts doesn't automatically translate to sustainable profits—or justify a price-to-anything ratio that defies conventional math.

Valuation Meets Volatility

When a company's market cap soars on promises and partnerships rather than proven performance, gravity eventually intervenes. The sell-off reflects a classic moment of market sobriety. Analysts whisper about stretched balance sheets and customer concentration risks hidden behind glossy press releases. One fund manager quipped it was "pricing in perfection for the next three decades, discounted to yesterday."

Where Does Nebius Go From Here?

The pressure is now on management to deliver tangible results that support the sky-high premium. Can they convert buzz into bottom-line growth, or is this the first crack in a speculative facade? For now, the market's verdict is clear: show me the money, not just the mega-deal headlines.

TLDRs;

• Nebius stock falls 4.6% amid investor concerns over sky-high valuation multiples.

• Shares remain over 400% above yearly lows despite recent pullback.

• Multi-billion-dollar Microsoft and Meta deals continue driving growth optimism.

• Heavy capital spending and rapid expansion increase both opportunities and risks for investors.

Nebius Group N.V. (NASDAQ: NBIS), one of 2025’s fastest-climbing AI infrastructure stocks, ended the week under renewed pressure as its shares slid 4.6% to close NEAR $98 on December 5.

The decline comes after a months-long surge that pushed Nebius to the center of the “neocloud” AI boom but has now left investors debating whether the stock’s valuation has stretched too far, too fast.

Even after the latest drop, Nebius remains one of the market’s most spectacular gainers. The stock is hovering around 30% below its October high of $141.10 but is still more than 435% above its 52-week low in April, underscoring just how aggressively Wall Street has bet on its growth prospects.

The rapid appreciation has pushed Nebius’ market capitalization to roughly $25 billion, a figure that implies lofty expectations—nearly 68× trailing revenue and close to 200× trailing earnings. With such aggressive multiples, the recent pullback is less surprising than the extraordinary year-long ascent that preceded it.

Nebius Group N.V., NBIS

Origins in Yandex, Rise as AI Neocloud Player

Nebius’ transformation from a legacy segment of Yandex N.V. into a leading independent AI infrastructure provider is central to its investment appeal. After separating from its Russia-based operations in 2024, the company rebranded as Nebius Group N.V. and shifted its focus toward building massive GPU clusters and end-to-end AI cloud environments across Europe and North America.

The company now operates data centers or cluster projects in Finland, France, Kansas City, and Vineland, positioning itself as Europe’s most prominent “neocloud” operator, a category of non-hyperscaler cloud companies offering AI-first infrastructure outside the Amazon-Google-Microsoft triopoly.

Nebius also maintains stakes in forward-looking businesses such as Avride, TripleTen, Toloka, and ClickHouse, helping broaden its ecosystem beyond compute hardware into software, autonomous systems, and developer tools.

Mixed Trading as Big Money Moves In

Institutional interest in Nebius has quietly increased despite recent price turbulence. Recent filings show firms like Sassicaia Capital Advisers initiating new positions, adding more than 25,000 shares during Q2 and making Nebius one of their larger holdings.

With institutional ownership near 22%, the stock is beginning to attract the steady long-horizon capital typically associated with maturing technology plays.

Still, Friday’s slide highlights the challenges of owning a hyper-growth name with equally hyper-aggressive spending. Nebius traded more than 13 million shares on December 5 as investors evaluated the company’s expanding commitments and the financial strain that may follow.

Mega Contracts Fuel Long-Term Bull Case

Nebius’ valuation might be high, but so is its revenue momentum. The company posted 355% year-on-year revenue growth in Q3, fueled by unprecedented demand for AI compute and cloud-scale GPU clusters. That momentum is now backed by two industry-shaping megadeals.

In September, Nebius secured a five-year contract to supply Microsoft with high-performance GPU capacity. The agreement, valued between $17.4 billion and $19.4 billion, sent NBIS stock soaring nearly 50% in a single session and established the company as a credible alternative to U.S. hyperscalers.

Just months later, Nebius revealed a second multi-year deal, this time with Meta Platforms. The $3 billion partnership will begin ramping deployments within months and is reportedly limited more by Nebius’ capacity constraints than by demand, further reinforcing the company’s positioning as a go-to infrastructure supplier for AI giants.

Together, these contracts have dramatically increased Nebius’ revenue visibility, strengthened investor confidence, and contributed to the stock’s 248% year-to-date surge.