Nebius Stock Jumps Ahead of Earnings. CoreWeave Gives it a Lift.

Dow Jones
14 hours ago

Nebius Group stock is rebounding from a rough few months, just in time for the cloud provider's third-quarter earnings report before the market opens on Thursday. Shareholders can thank CoreWeave, a major rival.

Nebius and CoreWeave are two of the most prominent neoclouds, a loose collection of companies taking on debt to rapidly stand up artificial-intelligence data centers and capture cloud computing demand. Their stocks fell sharply over the past few months as the costs of capital rose and fears about the pace of data-center construction emerged.

Shares of Nebius tumbled 58% from their all-time closing high on June 18 through last Thursday. And plenty of investors are betting Nebius won't be able to generate the revenue to justify its capital-intensive model. Some 23% of Nebius's publicly available shares are sold short.

Nebius jumped about 16% to $155.85 on Wednesday. CoreWeave rose about 24%.

But CoreWeave gave the neoclouds some life with a solid earnings report after the closing bell Tuesday. CoreWeave's interest expenses washed away its operating profit, but revenue was better than expected, and the company signaled it will rely on delayed-draw loans backed by customer contracts rather than high-interest unsecured bonds.

Nebius is much smaller than CoreWeave by revenue, and it isn't performing quite the same high-wire act as its rival. Just a few weeks ago, the company entered into a $3.5 billion secured-debt facility from Citi. It also has about $10 billion in outstanding convertible bonds.

Analysts expect the company to report $146 million in interest expenses in the third quarter, compared with CoreWeave's $846 million in net interest expense.

But Nebius, like CoreWeave, is still a long way from a profit. The company is expected to report a loss of 72 cents a share for the third quarter, per FactSet, wider than its 41-cent loss a year ago. Revenue is exploding: Analysts forecast year-over-year revenue growth of over 500% to $907 million in the third quarter. Beating that estimate would provide another sign that demand remains robust.

Either way, expect Nebius to face questions about both the cost of its buildout and the potential roadblocks posed by the widespread backlash to data centers. The company has both operational and planned sites in several U.S. states, plus several facilities in Western Europe and Scandinavia.

 

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