Nebius stock analysis: what next for this CoreWeave rival after earnings?

Nebius stock will be in the spotlight today as the European technology giant publishes its financial results, which are expected to show robust revenue and backlog growth. NBIS was trading at $129 on Tuesday, a few points below the all-time high of $197.

Nebius stock in focus as it releases its financial results 

The neocloud industry is booming, with more companies, especially those in the Bitcoin mining industry entering the sector. Early signs are that Nebius and CoreWeave are showing signs that they are becoming duopolies in the sector, thanks to their massive orders.

Nebius recently reached a $27 billion deal with Meta Platforms, making it one of the biggest partnerships in the industry. This is on top of its large deal with Microsoft, a top player in the AI industry.

The company also received a $2 billion investment from NVIDIA, a company that supplies its GPUs. That investment is a sign that NVIDIA expects its business to continue growing in the foreseeable future. It also bought Eigen AI in a $600 million deal

Looking forward, the next important catalyst for the NBIS stock is the upcoming financial results, which will provide more color about its revenue growth, capital expenditure, and its backlog.

Wall Street analysts are highly upbeat about its business, with the average estimate showing that its revenue jumped by 602% to over $388 million. The second quarter’s estimate is that its revenue will be $593 million, up by 464% YoY.

Its annual revenue this year is expected to surge by 522% to $3.3 billion, followed by $10 billion next year. These metrics make it one of the fastest-growing companies in the industry.

The main challenge for the company is that its capital expenditure is expected to keep rising in the foreseeable future as GPU, memory chips, and other products continue rising. Indeed, the top hyperscalers like Microsoft, Google, and Amazon pointed to the rising costs as the main reason for boosting their capital expenditure plans.

The rising costs, together with the fear of cash burn, explains why the Nebius stock has a high short interest of almost 20%. Still, we believe that these fears are unwarranted as the company needs to keep spending to fund its data centers. 

It will eventually slow its spending and start focusing on profitability. This is the same approach that companies like Meta Platforms and Tesla used before they became profitable.

Analysts have a mixed outlook about Nebius, with the average target being $139, 11% below the current price. In a recent note, Tai Liani, a Bank of America analyst, predicted that the company will go up to $205, while DA Davidson has a target of 

Nebius share price technical analysis 

NBIS stock chart | Source: TradingView

The daily chart reveals that the NBIS share price bottomed at $73 earlier this year. It formed a double-bottom pattern whose neckline was at $109.32, its highest point on January 16. 

The stock also moved above the crucial resistance level at $141, the upper side of the cup & handle pattern. It has constantly remained above the 50-day and 200-day moving averages, months after it formed a golden cross pattern.

Therefore, the stock will likely resume the uptrend in the coming days. If this happens, the initial target to watch will be at $200, followed by the psychological level of $220. 

However, as we saw with the CoreWeave stock, there is a risk that it may drop as bears attempt to fill the gap that was created earlier this month. This retreat, if it happens, will likely be a short-term one ahead of the potential rebound.

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