Nebius Stock Has Fallen About 40% From Its Record. Here's Why I'm Still Waiting to Buy.

Nebius Group's stock price has plummeted around 40% since reaching a record high on June 18, trading at roughly $165. The majority of the decline has occurred in October, with a 30% drop alone during that month. Despite the recent slump, the stock has still gained nearly double its value this year. However, the price may not yet reflect its potential upside.

The company anticipates a surge in revenue in the next two quarters, but its recent announcements, such as a minor software acquisition and a developer-training program, haven't provided new reasons for optimism. The broader market sentiment seems to have turned against AI cloud providers like Nebius. With remarkable growth, revenue has skyrocketed from $228 million late last year to $582 million in Q2 2026, marking a 454% increase year-over-year.

However, the most recent quarter saw revenue growth slow down to 46%. Despite the slowdown, annualized run-rate revenue has surged from $1.9 billion in March to $3.0 billion in June. Management forecasts revenue to range between $3.0 billion and $3.4 billion for 2026, with an annualized run-rate of $7 billion to $9 billion. To reach even the lower end of that forecast, Nebius would need to bring in $2 billion in the second half, more than double the first half's total.

Annualized run-rate revenue would likely be closer to $2.7 billion if it maintained its current pace. Management expects new capacity to kick in during Q3, but the impact will only be evident in the next earnings report. Capital expenditures for capacity deployment alone amounted to $5.7 billion in Q2, and the company reported a net loss from continuing operations of around $190 million.

Customer commitments are substantial, with $40 billion in remaining performance obligations. However, the actual revenue from these commitments is expected to be only about 36% by the end of 2028. Three customers accounted for 59% of Q2 revenue, but the top clients are unnamed. Microsoft and Meta Platforms are two of the largest deals, each worth over $10 billion.

With a stock price around 15 times the sales forecast for the year, Nebius appears expensive, even if the multiple has declined. At its June peak, the multiple was closer to 24 times sales. While the stock has dropped significantly, it may not be an ideal entry point for investors. The company's exceptional growth is impressive, but the current valuation is still high.

A third-quarter report indicating revenue nearing $1 billion a quarter and diversified customer backing would be a positive sign, along with a lower stock price.