Shares of Nebius Group (NBIS), a leading AI infrastructure provider, plummeted 6.18% in pre-market trading on Thursday, as investors reassess the company's valuation and some opt to take profits following the stock's recent surge. The sharp decline comes despite Nebius' recent announcement of a significant multi-year contract with Microsoft, valued at up to $19.4 billion.

The pre-market drop appears to be driven by several factors:

1. Valuation concerns: Recent analysis suggests that Nebius shares are trading at a premium compared to competitors like CoreWeave (CRWV), which offers a more attractive valuation despite similar growth prospects. This disparity has prompted investors to reconsider their positions in Nebius.

2. High debt load: Nebius has taken on nearly $1 billion in debt to fuel its expansion plans. While the company recently raised $4.2 billion through an equity offering, the growing debt load continues to weigh on investor sentiment.

3. Continued unprofitability: Despite impressive revenue growth, Nebius reported an operating loss of $111.2 million in the second quarter. This ongoing lack of profitability may be causing some investors to question the company's long-term financial health.

4. Profit-taking: Nebius has been one of the hottest AI stocks of 2025, with shares skyrocketing over 250% year-to-date through September 19. The dramatic rise may have prompted some investors to cash in on their gains, contributing to the pre-market sell-off.

While Nebius continues to show promise in the long run, benefiting from the booming AI market and its recent deal with Microsoft, investors appear to be taking a more cautious approach in the near term. The pre-market plunge reflects a reassessment of the stock's valuation in light of these factors, potentially signaling a period of consolidation for this high-flying AI stock.