Nebius Stock: Navigating the Gap Between Expansion and Earnings

Nebius Group's Q4 revenue missed estimates, but operational growth is strong with 127% ARR surge. Analysts remain bullish on long-term AI infrastructure potential.

Shares of Nebius Group are experiencing significant volatility following the release of its fourth-quarter 2025 financial report. The stock has been caught in a tug-of-war between selling pressure and recovery attempts, as the market digests a quarter where robust operational growth collided with earnings that fell short of lofty Wall Street forecasts. This raises a pivotal question for investors: is the current pullback a temporary growing pain or a more serious cautionary sign?

Underlying Momentum Amid a Revenue Shortfall

The company, a specialist in AI infrastructure, reported figures on February 12 that initially disappointed. For Q4, revenue reached $227.7 million, missing the consensus estimate of $246 million. The bottom line also underwhelmed, with a loss per share of $0.69, notably wider than the $0.42 loss analysts had projected.

This mismatch between expectation and reality triggered a sharp 9% decline in the share price on February 20. A brief recovery to around $102.58 was quickly eroded by broader market weakness, leaving the stock trading in the mid-$90 range.

Beneath the headline numbers, however, key operational metrics tell a story of rapid expansion. The company's active power capacity—a critical gauge for AI data centers—reached 170 megawatts by year-end, substantially surpassing its internal target of 100 MW. Furthermore, annual recurring revenue (ARR) surged to $1.25 billion, representing a striking 127% increase from the previous quarter.

Long-Term Guidance and Strategic Moves

Management has provided ambitious full-year 2026 revenue guidance of $3 to $3.4 billion. While this would constitute a massive year-over-year jump of over 550%, it sits below the most aggressive analyst models that had penciled in figures as high as $4 billion.

Concurrently, Nebius is strategically broadening its offerings. The acquisition of Tavily for $275 million brings specialized AI search tools into the fold, signaling a deliberate move into the higher-margin software segment.

Analyst Sentiment: Focus on the Horizon

Despite near-term volatility, the predominant view among financial institutions remains favorable. The current analyst consensus stands at "Moderate Buy," with an average price target of $143.22. Northland Securities presents a particularly bullish case, maintaining a target of $211 per share.

This optimism is anchored by substantial forward-looking indicators. The company boasts a massive backlog exceeding $22 billion and has secured contracted power capacity of more than 3 gigawatts. Adding to the financial stability, Nebius received customer prepayments of approximately $830 million in the fourth quarter. This funding model significantly de-risks the balance sheet, as a large portion of planned 2026 investments is expected to be covered directly from operational cash flow.

Nebius Group stands at a crucial inflection point. The tension between its enormous infrastructure build-out and current financial performance continues to fuel high volatility. The trajectory of the stock will largely depend on management's ability to efficiently convert these newly created capacities into revenue-generating services in the coming quarters.