Nebius stock price has been in the spotlight this year as investors assessed the growth trajectory of the artificial intelligence industry. NBIS was trading at $23.45 on Thursday, down by over 54% from its highest point this year and 73% from its highest level in 2024. So, is Nebius a good AI stock to buy this year?
Nebius is a giant AI infrastructure company
The AI industry has grown rapidly in the past few years, producing several large companies. OpenAI recently raised a record $40 billion from investors like Softbank. Elon Musk’s xAI has become a $40 billion juggernaut. Other companies like Perplexity and Figure have become some of the biggest firms in the industry.
AI infrastructure has become a big industry as companies have continued to expand their data centers globally. A good example of its success is NVIDIA, the top GPU company in the industry that has become a $2.5 trillion company, making over $100 billion annually in revenue.
Read more: Nebius Group stock price outlook: will the NBIS crash continue?
This growth has also led to the growth of AI infrastructure companies that offer data centers and lease their solutions to firms like Microsoft, Amazon, and Google. Nebius and Coreweave are some of the best-known companies in the industry.
Nebius, which is associated with the Russian founder of Yandex, has become one of the biggest players in the sector. It runs three key businesses, with its most important one being one where it offers large data centers in key countries.
Nebius also runs Toloka AI, a company that partners with other companies in all stages of their development. Its solutions include data labeling, quality control, and training of large data centers. On this, it acts as the human training machine that helps developers.
Nebius also has another business called TripleTen, an education platform for teaching people about technology and other science industries.
The company believes that it has a large total addressable market of about $410 billion, which will keep growing over time.
Business is growing from a low base
Nebius Group has a market cap of over $5.7 billion, making it a highly overvalued company now that its revenues are relatively small. The most recent results showed that its revenue for the fourth quarter was $37.9 million, up from $6.7 million. Its annual revenue surged to over $117 million, up from $20.9 million from a year earlier.
Analysts believe that the company’s business will continue growing in the coming years. Its annual revenue is expected to come in at $553 million this year followed by $943 million next year.
The hope is that its losses will continue narrowing in the coming years as it slows its investment on its AI infrastructure.
However, the risk is that there is an oversupply of AI data centers, which could cap its growth. Just recently, it was reported that Microsoft was halting some of its data centers. There is also a risk from Chinese companies that have created advanced models at lower costs.
Nebius stock price analysis
The daily chart shows that the NBIS share price has been in a strong downtrend in the past few weeks as concerns that the AI bubble was bursting rose. It moved from the year-to-date high of $50 to the current $23. This crash has cost investors billions of dollars.
The stock has moved to below the bottom of trading range of the Murrey Math Lines and the 50-day moving average. Most importantly, it is about to form a double-bottom pattern at $14.35, its lowest point in October last year. Its neckline is at $50.70.
Therefore, there is a likelihood that the stock will surge, and possibly hit the resistance point at $50.80, which is about 120% above the current level. A drop below the support at $14.3 will invalidate the double-top pattern and drop to $10.
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