Nebius Group N.V. (NASDAQ:NBIS) is painting a picture of both explosive growth and concerning losses. The AI infrastructure firm's stock took a 5% hit on Tuesday, November 11, 2025. What's behind this? Let's dive into the numbers.
On one hand, Nebius Group is boasting a 355% year-over-year revenue surge in Q3 2025, hitting $146 million. That's not pocket change. And the lion's share – 90% – is coming from their core infrastructure segment. Plus, they've inked massive deals: a $17.4 billion agreement with Microsoft and a $3 billion supply agreement with Meta Platforms. The Meta deal alone, spanning five years, promises significant capacity deployment over the next three months.
But here's where the story gets murkier. Nebius Group's adjusted net loss ballooned to $100.4 million in Q3 2025, compared to a $39.7 million loss in the same period last year. That's a considerable expansion of losses. And despite the impressive revenue growth, the $146.1 million Q3 figure fell short of analysts' expectations of $155.7 million. A miss is a miss, no matter how small. (Analysts' expectations, of course, should always be taken with a grain of salt.)
These partnerships with Microsoft and Meta are clearly a double-edged sword. They're generating significant revenue, yes, but at what cost? The company is aiming for an annualized run-rate revenue of $7 billion to $9 billion by the end of 2026. Achieving that lofty goal while simultaneously curbing those widening losses will be their biggest challenge.
The AI Arms Race and the Bottom Line
Nebius Group is in the middle of an AI infrastructure arms race. They're expanding capacity from 1 to 2.5 gigawatts by 2026, backed by a hefty $5 billion investment. That's a 150% increase in capacity. Arkady Volozh, the Founder and CEO, envisions Nebius evolving into a comprehensive AI platform through Aether 3.0 and Token Factory, integrating cloud, software, and data centers.
But here's the part of the report that I find genuinely puzzling: how can a company with such massive deals and revenue growth be hemorrhaging money at this rate? Is it simply the cost of scaling up to meet the demands of AI giants like Microsoft and Meta? Or are there deeper inefficiencies at play?
It's a classic "growth at all costs" scenario, but it's reaching a point where the costs are becoming unsustainable. Sure, analysts are saying the partnerships with Microsoft and Meta solidify Nebius's position in the AI cloud sector. But what good is market position if you're bleeding cash? Nebius Group: Buy The Emerging Power Of The AI Cloud - Seeking Alpha
The key question becomes: can Nebius Group scale its operations efficiently enough to turn that massive revenue into actual profit? The next few quarters will be crucial in determining whether they can achieve this delicate balancing act. Are they building a sustainable business, or just a flash in the pan fueled by hype and unsustainable spending?
The Red Flags Are Waving
Nebius Group’s story is a high-stakes gamble. The massive revenue growth is undeniable, but the widening losses are a glaring warning sign. Until they can demonstrate a clear path to profitability, the stock's recent dip may be just the beginning of a more significant correction. I'm not saying they're doomed, but I am saying investors should proceed with extreme caution.