ChatGPT Disagrees With Michael Burry Over Nebius (NBIS)

Michael Burry remains skeptical about Nebius (NBIS), despite its impressive stock performance. The AI infrastructure specialist has seen its shares surge nearly 210% year to date and 280% over the past year, outpacing the S&P 500. ChatGPT even included NBIS among its top 10 stock picks, which led to a 141.6% gain since its investment.

Nebius specializes in building and operating data centers filled with high-end GPUs, renting out computing power to companies for AI model development. The company reported a remarkable 454% year-over-year revenue growth and turned positive Adjusted EBITDA of $236.2 million in Q1. Its segment margin hit an impressive 50%, and cash from operations became positive, marking a turnaround from previous losses.

Burry's concerns stem from Nebius' compute contract pricing. Initially, the company projected 1 GW of capacity for the year, with an ARR of $9 billion. However, in Q2, Nebius inked deals worth more than $20 million per MW, more than double the earlier estimate. Bulls anticipate further price increases, with new short-term and auction-based deals already reaching $40-50 million per MW.

The stock's valuation appears high, trading at 53 times trailing sales and 20.5 times forward sales, far exceeding the sector median of 3.7 and 3.4 times, respectively. Its P/E ratio stands at an astonishing 1,690, and short interest is significant at around 25%.