- Nebius stock price has soared to a record high this year.
- The company has made some major deals in the past few months, including with Meta Platforms.
- NBIS has formed a cup-and-handle pattern, pointing to more gains.
Nebius stock price surged to a record high last week as the market reacted to several important developments from the company. NBIS jumped to $150, up 100% from its February low. This surge has brought its market capitalization to over $38 billion.
Nebius Group is Thriving Amid Rising AI Compute Demand
Nebius Group has slowly become one of the fastest-growing companies on Wall Street, helped by its positioning in the booming artificial intelligence industry, where it has become a partner to the biggest players in the industry.
The company’s core business is building large data centers and then leasing the solutions to companies building AI models. It has achieved a lot in the past few weeks, including launching a $27 billion deal with Meta Platforms, the parent company of Facebook and Instagram.
Nebius has other large companies, such as Microsoft, which placed a $17 billion order, and Revolut. The management believes that demand is currently outpacing supply, and is working on more data centers, including a recently announced one in Finland.
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The company’s revenue is growing, with analysts expecting it to reach $3.29 billion this year, up 521% YoY. It is expected to make over $9.7 billion next year and $20 billion a year later. A recent report showed that NVIDIA GPU rental prices have soared by 40% in the last 6 months.
Still, the biggest challenge for Nebius and other companies in the neocloud industry is the soaring cost of GPUs, servers, and memory amid rising demand.
As a result, the company is boosting its capital expenditure and its debt load, with analysts predicting that it will spend between $16 billion and $20 billion in capital expenditure.
Nebius has continued to raise capital in the past few months, including $4.3 billion in convertible senior notes issued in March. It also raised $2 billion from NVIDIA, and will mostly use them to buy its chips.
Still, Nebius Group has more catalysts than headwinds ahead. It has secured orders from the biggest companies in the world, and its investors understand that the data center buildup will not be cheap.
A good example of this business is Tesla, which burned billions of dollars building its vehicles. It then pivoted its business to focus on profitability a few years ago. Other large tech companies like Uber and Spotify have also followed the same model.
The company also believes its GPUs are assets it will sell over the next few years and recover most of the costs.
Nebius Stock Price Technical Analysis
The daily timeframe chart points to more gains this month. It has formed a giant cup-and-handle pattern, a common bullish continuation pattern in technical analysis.
The profit target in a C&H pattern is estimated by subtracting the lower side of the cup from the upper side. In this case, this difference is $68.
One then adds this amount to the upper side of the cup, which brings its target to $210, which is about 48% above the current level.
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