Should You Buy Nebius Stock After Its Third-Quarter Sell-Off?

Nebius Group (NASDAQ:NBIS) posted third-quarter results on Thursday, Nov. 12, and revenue grew 571% year over year to around $981 million.

But investors focused on the outlook. The artificial intelligence (AI) cloud provider now sees 2026 revenue at the low end of its $3.0 billion to $3.4 billion range. Shares dropped as much as 23% on Thursday and trade near $130 as of this writing, more than 55% below their 52-week high of $299.86.

Last week, I said I'd wait for this report and its September annualized revenue run rate (ARR) before buying. That number was $6.4 billion, far above the $4.6 billion or so I said would keep Nebius on pace for its year-end target.

But management still moved that goal back by around two months.

The quarter got a one-time lift

Third-quarter revenue of $981 million was 68% over the second quarter's $582 million. Second-quarter revenue, in turn, had risen 46% from the first quarter.

But around $325 million of the third-quarter total, or about a third, was non-recurring revenue from Nebius' asset-light model, where partners fund capacity and run Nebius' platform on it. Without it, revenue rose about 13% from the second quarter, a sharp slowdown. Nebius multiplies a quarter's last month of revenue by 12 to get ARR, which hit $6.4 billion in September, up 113% from $3.0 billion in June. Even so, Nebius now expects ARR to pass $7 billion only in February, rather than reaching $7 billion to $9 billion by December. Management also said asset-light revenue "can add choppiness to ARR," and Nebius will stop guiding to the metric after this update.

Put simply, the figure I waited for doesn't settle much on its own.

Is it really timing, not demand?

"Demand has never been stronger, and the changes in our 2026 guidance are just about timing, not demand," CFO Dado Alonso said on Thursday's analyst call.

On demand, I think the evidence stands up. Nebius said prices for its third-quarter deals climbed over 20% per GPU-hour from the second quarter. Prepayments for those deals covered more than 100% of the related capital spending, up from 50% to 60% for second-quarter deals. And customers have committed over $12 billion in contract value since the start of the third quarter. Yes, remaining performance obligations (signed contract revenue not yet recognized) grew just 3% to $38.7 billion in the quarter. But customers paying more, and more of it up front, is tough to square with weak demand.

The delays are specific, too. Delivery at several third-party colocation sites slipped into the first half of 2027, including the rest of Nebius' New Jersey capacity for Microsoft. There, a partner began retiring part of its temporary power generation before the shift to permanent power, which reset the schedule.

Still, timing matters a lot to a business that only earns revenue when its capacity is turned on. To hit even $3.0 billion this year, Nebius needs around $1.04 billion in fourth-quarter revenue -- almost 60% more than its recurring third-quarter revenue, unless more one-time revenue closes the gap.

Nebius is spending more to get there

Nebius spent around $15.4 billion on equipment and other capital purchases through September, so its new forecast of about $27 billion means almost $12 billion more in just the fourth quarter. For 2027, it sees capital expenditures of $40 billion to $45 billion, versus revenue of $12 billion to $13 billion.

Management expects customer prepayments and borrowing against contracts with investment-grade customers to fund 75% to 85% of next year's capital spending. The rest, around $6 billion to $11 billion, might come from its $7.4 billion in cash, its operations, or new capital. Nebius sold around $1.0 billion in stock in the third quarter at an average price of about $229 per share. At the current share price, raising that amount would require about 76% more shares. And Nebius doesn't expect to break even before taxes until the fourth quarter of 2027.

At roughly $130, Nebius' market cap of about $38 billion is about 12 times sales at the midpoint of the new 2026 range, and about 3 times its 2027 sales outlook. For a tech business expecting to about quadruple revenue next year, I think this price might look low in hindsight if its owned sites come online on schedule.

Has the sell-off made Nebius a buy, then? I'd consider taking a small position now instead of waiting for another report. But I'd add to it only if fourth-quarter revenue makes the jump the guidance needs.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool has a disclosure policy.