Nebius shares experienced a significant downturn on Thursday, plummeting 10%. The publicly traded neocloud company reported third-quarter revenue that surpassed analysts’ expectations, yet the decline in Nebius stock followed the release of a disappointing fiscal year 2026 outlook and a substantial increase in its projected capital expenditures for 2026 and 2027, according to CNBC.
The company’s third-quarter results showed a considerable jump in revenue, rising 571% compared to the previous year. Nebius reported a net loss of $37.5 million, translating to a loss of 13 cents per share, which marks an improvement from the $119.6 million net loss, or 50 cents per share, recorded in the same period last year. However, CNBC noted that it was not immediately clear if the reported loss per share was comparable to the 69 cents anticipated by analysts.
Looking ahead, CEO Arkady Volozh conveyed in a letter to shareholders that Nebius anticipates fiscal year 2026 revenue to land at the lower end of its $3 billion to $3.4 billion forecast range, while FactSet had projected $3.35 billion. For fiscal year 2027, the company shared an initial revenue outlook of $12 billion to $13 billion, which it described as ‘reflecting a conservative approach to the pace of our build-out.’ This figure also aligns closely with FactSet’s expectation of $12.09 billion for 2027.
Capital Expenditure Projections Spark Investor Concern
A primary driver for the stock’s decline was Nebius’s revised capital expenditure (capex) projections. The company now expects FY2026 capex to reach $27 billion, a significant increase from its prior guidance of $20 billion to $25 billion and FactSet’s forecast of $23.85 billion. Furthermore, the anticipated FY2027 capex of $40 billion to $45 billion substantially exceeded FactSet’s expectation of $28.77 billion. These increased spending plans indicate a more aggressive investment in infrastructure for the neocloud sector.
This development for Nebius contrasts with recent positive financial reports from other neocloud providers. In the past week, CoreWeave and IREN both disclosed better-than-expected financial results, which provided a boost to their respective stock prices. These companies, along with Nebius, had previously experienced steep selloffs driven by concerns about the sustainability of the artificial intelligence buildout. Just the day before Nebius’s announcement, neocloud companies rallied robustly, with CoreWeave surging nearly 25%, Nebius climbing 15%, Applied Digital rising over 7%, and IREN adding almost 6%.
Broader Neocloud Market Faces Multiple Headwinds
The neocloud market operates within a complex landscape, experiencing both political and corporate pressures. Last week, U.S. voters passed numerous ballot initiatives aimed at restricting the development of data centers, which are essential for neocloud operations. Concurrently, Democrats secured significant victories in both houses of Congress. These legislative and public sentiment shifts could influence the regulatory environment and expansion capabilities for companies like Nebius, which are actively competing to establish new data centers.
Adding another layer of volatility is the situation surrounding Nvidia, a key player that has significantly fostered the neocloud market through investments and project backing. A recent Wall Street Journal report indicated that Nvidia’s board is planning to oust CEO Jensen Huang following revelations concerning his affairs, including one reportedly involving an alleged Chinese spy. Nvidia held approximately $329 million in Nebius shares as of late June, according to a filing, underscoring its vested interest in the neocloud sector.
The performance of neocloud companies and their capacity for expansion are critical for the global advancement of artificial intelligence. Increased capital expenditure forecasts, such as those from Nebius, combined with political obstacles to data center development and governance issues at major industry investors like Nvidia, can have far-reaching implications. These factors could influence the cost and pace of AI infrastructure deployment worldwide, affecting technological innovation, data processing capabilities, and the digital economy for international businesses and consumers relying on these foundational services.
Investors and industry observers will closely monitor Nebius’s conference call scheduled for 8 a.m. ET, during which executives are expected to discuss the latest results and provide further guidance. The evolving dynamics within the neocloud market, the ongoing artificial intelligence buildout, and the developments at key stakeholders like Nvidia will remain central points of attention in the coming weeks and months.
Image: CNBC
Sources consulted
- CNBC: Nebius falls 10% as company expects increased 2026 capex spend, issues weak outlook
- Reuters: Nebius beats quarterly revenue estimates on strong AI demand
- MarketWatch: Nebius stock slumps after guidance that revenue to come in low end of guidance
Darius Zerin specializes in business strategy, entrepreneurship, and market trends. He covers everything from startups to global finance, offering practical insights and forward-thinking analysis. His writing is designed to help readers stay ahead in a constantly evolving economic landscape.
