Nebius Group (NasdaqGS:NBIS): Evaluating Valuation After Raised Guidance and Q2 AI-Fueled Turnaround

Nebius Group (NasdaqGS:NBIS) just raised the bar with its latest update.

If you are wondering what to do after Nebius Group (NasdaqGS:NBIS) rocketed higher this month, you are not alone. Following a blockbuster second quarter featuring a shift from steep losses to strong net income, the company bumped up its full-year revenue outlook to as much as $1.1 billion. Management credited a big jump in core AI infrastructure revenue and rapid data center expansion, moves that are clearly capturing Wall Street’s attention. With investors digesting those numbers and updated guidance, questions about what’s next for the stock are front and center.

The rally has been dramatic, as shares surged 39% in the first two weeks of August alone on the back of these announcements, before a bout of profit-taking set in. That performance builds on a sustained uptrend, with Nebius ramping up over 148% year to date as enthusiasm for AI and infrastructure plays grows. It is a turnaround story that has gained momentum, aided by new client wins and capacity investments, even as some investors debate whether gains can be sustained against heavyweight competitors and execution risks.

After such a strong move, it is fair to ask: Is Nebius Group pricing in the full effect of its new outlook, or does the potential for further upside remain for those willing to step in now?

Most Popular Narrative: 19.9% Undervalued

According to community narrative, Nebius Group is viewed as undervalued with close to 20 percent upside relative to fair value. This perspective considers accelerating AI demand, business expansion engine, and profitability benchmarks in light of stiff industry headwinds and challenging execution questions.

The current valuation assumes Nebius Group can sustain hyper growth in AI compute infrastructure. However, market-wide demand for AI and machine learning clouds is attracting intense competition and rapid adoption of open-source technologies. This environment could create pricing pressure and erode margins over the next several years, directly impacting long-term profitability and gross margins.

Why is Wall Street betting big on Nebius Group? The bullish case centers on ambitious future growth rates and a profit margin reset that could transform the company's valuation. Want to see which high-octane projections and bold financial assumptions are driving this narrative's price target? Prepare for some surprising math in the analysts' playbook.

Result: Fair Value of $89.40 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rapid shifts in AI demand or successful global expansion could challenge assumptions about Nebius Group’s valuation and long-term earnings outlook.

Find out about the key risks to this Nebius Group narrative.

Another View: What the SWS DCF Model Suggests

Switching approaches, our DCF model presents a very different picture. While the market may see promise, this method finds Nebius Group overvalued and challenges the optimism found in the prior narrative. Which method truly reflects reality?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Nebius Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Nebius Group Narrative

If you think these assessments miss the mark or you want to dig deeper on your own terms, you can shape your own view of Nebius Group in just a few minutes. do it your way.

A great starting point for your Nebius Group research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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