If you missed Nvidia in 2016... (From Behind the Markets)

After its Q4 2025 earnings release, shares of Nebius (NASDAQ: NBIS) pulled back as investors digested the news. The move lower may have been warranted, as the company missed top- and bottom-line forecasts. However, as bad as missing estimates may be, the bar was set high—very high—and growth was robust.

Nebius announced massive revenue growth underpinned by its shift to AI cloud services and contracts with major hyperscalers, including Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META).

The critical takeaway from the report isn’t that results missed expectations, but rather that business is booming. Earnings shortfalls are tied to spending, spending is tied to business expansion, and expansion is tied to growth. 

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Nebius Accelerates in Q4: Guides for Acceleration in 2026

Nebius had a robust quarter with revenue growing by 55% sequentially and nearly 550% year-over-year (YOY). The top line missed the consensus, but the miss is slim—about 280 basis points—and offset by an outlook for sustained growth. Internal metrics, including operational capacity and annual recurring revenue, all came in above the most-recently issued guidance. 

The margin news is mixed. The company’s reported losses widened as it leaned heavily into capacity expansion, product development, and GPUs. However, the losses are strictly due to CapEx and expansion, as the operational metrics showed improvement.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $15 million, indicating the Nebius' ability to generate profits. The hurdles now are execution and scale, and they seem to be less of a problem than they could be. 

If Nebius’ 2026 guidance is believable, it will sustain its 500% growth pace through year’s end. As it stands, capacity is sold out as the company—and its clients—await the build-out of new data centers. The company is on track to more than double its existing footprint, with many new projects slated for the United States and Europe coming online this year. Expansion plans include a new data center in France; upon completion, it will be among the largest in the region, bolstering the long-term growth outlook. 

Analysts Cautiously Optimistic on Nebius Expansion

Analysts’ response to Nebius’ Q4 results and updated outlook is optimistic, with some price targets raised, at least one rating upgrade, and several bullish initiations. They cite the strength of results and aggressive expansion plans while highlighting risks, which include delays and financing. The company’s rapid expansion is capital-intensive, potentially needing cash injections that raise the risk of debt and dilution. 

The Q4 balance sheet highlights the risks, including a significant increase in debt, although the news is not entirely bad. While debt is up, the company is sufficiently capitalized to execute its plans without additional capital in the near term.

In this scenario, with revenue ramping and operational profitability improving, Nebius may be in the clear. Regarding analysts' revisions and consensus trends, MarketBeat tracks 10 with current ratings; they peg the stock at Moderate Buy, price targets are rising, and consensus forecasts more than 60% upside from February support targets. 

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Institutions and Short-Sellers Set up NBIS for a Robust Rebound

Short sellers are a risk for NBIS investors. At nearly 15% of the float, current short interest is relatively high and could cap gains in the near-to-mid-term. The upshot is that institutions are accumulating, analysts are optimistic, and the outlook is bright, so short covering may begin in early 2026. In this scenario, short covering will aid in the rally, and good news can spark a short squeeze, potentially lifting this market by 25% to 50% in a short period. The critical resistance point is at the current highs, near $135, and will mark a significant pivot when crossed. 

The post-release price action was mixed. The market fell in early trading but recovered from the low, suggesting a mix of caution and optimism. The likely outcome is that NBIS stock continues wallowing near February lows until a more potent catalyst emerges. 

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