Why Nebius Group Stock Popped 33% in April and Why It Continues to Power Higher

Key Points

Nebius spiked last month, after losing ground earlier this year.

Several recent developments highlight the increasing demand for its neocloud services.

Depending on how you look at it, the stock may be attractively priced.

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Shares of Nebius (NASDAQ: NBIS) charged sharply higher in April, gaining 33.2%, according to data supplied by S&P Global Market Intelligence.

While the broader market rebound helped lift the stock, company-specific catalysts sent the neocloud and artificial intelligence (AI) specialist into overdrive.

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The hits keep coming

Nebius kicked off the month with some positive vibes from Wall Street. Cantor Fitzgerald analyst Brett Knoblauch initiated coverage of the stock with an overweight (buy) rating and a $129 price target. The analyst cited persistent demand for AI and Nebius's position as an AI infrastructure provider as the drivers of his bullish stance, according to Thefly.com.

The rally gained steam when rumors emerged that Nebius was in talks to acquire AI21 Labs. While there's still no confirmation that the deal was ever consummated, it could provide Nebius with AI21's suite of large language models and its Maestro agentic AI platform, extending its AI capabilities from infrastructure to high-margin software and platforms and increasing Nebius's addressable market.

The momentum continued as BofA analyst Tal Liani raised his price target to $175, up from $150. The analyst cited recent contract wins for Nebius and rival CoreWeave as evidence of increasing demand for AI infrastructure from neocloud providers.

This positive sentiment built on the strong momentum that began in March. Nebius inked a $27 billion deal with Meta Platforms to provide dedicated compute capacity over a five-year period beginning in 2027. The deal was a big vote of confidence for Nebius, solidifying its position as one of the leading neocloud providers.

The company also got a boost thanks to a strategic partnership and $2 billion investment from AI bigwig Nvidia. The deal will enable Nebius to deploy more than 5 gigawatts of compute over the next five years, increasing the cloud capacity it rents to its customers.

On a final note, while it didn't happen in April, reports emerged on May 1 that Nebius had acquired Eigen AI. The deal will strengthen Nebius's offerings with advanced AI inference capabilities and AI model optimization -- a fancy way of saying its AI models will be more efficient, and therefore less costly.

This stream of positive developments lifted the stock to new heights in April, and the gains have continued into early May.

Is the stock a buy?

With all that as a backdrop, is Nebius stock a buy? As with so many things, the answer is "it depends." The company isn't yet profitable, as it continues to invest heavily in data centers and servers to deliver cloud-based AI services to its customers. The company is currently selling for 82 times sales, which is extremely pricey. However, looking ahead, it's selling for 14 times forward sales and less than 5 times next year's expected sales. Remember, the big deal with Meta doesn't kick in until 2027.

Furthermore, in 2025, Nebius reported revenue of $530 million, up 479%. Perhaps more telling is the company's annual recurring revenue (ARR) of $1.25 billion, and its full-year 2026 ARR forecast of $8 billion at the midpoint of its guidance.

Taken together, the data suggest Nebius has a bright future. Right now, it's a high-risk, high-reward proposition, but the risk is quickly fading as demand for the company's neocloud services accelerates and its backlog increases. As such, I believe Nebius is worthy of a small stake as part of a well-balanced portfolio.

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Bank of America is an advertising partner of Motley Fool Money. Danny Vena, CPA has positions in Meta Platforms and Nvidia. The Motley Fool has positions in and recommends Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.