BNP Paribas has initiated coverage on Dutch AI infrastructure services firm NEBIUS (NBIS.US) with a Neutral rating and a $255 price target, stating the recent sharp rally in the stock has limited its near-term upside potential.

The analyst team, led by Stefan Slowinski, noted that NEBIUS has surged more than 210% year-to-date, making it a popular play for investors betting on the AI compute shortage. The analysts added that strong execution, short-term rental contracts benefiting from rising GPU lease rates, and ownership of strategic assets with monetization potential—such as a roughly 25% stake in ClickHouse—have collectively driven the company's valuation higher.

Slowinski and his team stated, "However, our modeling of Nebius's data centers shows that despite recent increases in lease quotes and product mix benefits from the new generation of NVIDIA GPUs, the company's 2026 annual recurring revenue has only modest upside relative to management guidance. Current market pricing implies an optimistic scenario of persistently high compute rental rates and flawless operational execution, making the stock's near-term risk-reward profile less attractive in our view."

BNP Paribas also initiated coverage on NEBIUS's competitor CoreWeave (CRWV.US) with an Outperform rating and a $192 price target.

This follows a similar cautionary note from investment firm D.A. Davidson. Analyst Gil Luria stated, "Since our initial coverage over a year ago, Nebius shares have significantly outperformed, evolving from a peripheral name to a core AI trade. Its current premium is justified, but it also caps near-term gains." D.A. Davidson has a Neutral rating and a $250 price target on NEBIUS.

In May, NVIDIA (NVDA.US) CFO Colette Kress noted on the company's earnings call that lease rates for the H100 had increased by about 20% year-to-date, while cloud service prices for the A100 had risen nearly 15%. These remarks fueled market concerns over AI compute scarcity, sending shares of AI cloud service providers like NEBIUS and CoreWeave sharply higher.

At Tuesday's market close, shares of NEBIUS fell 1.49% to $260.58.