Nebius Group's Contrasting Market Signals and Long-Term AI Infrastructure Potential: Navigating Short Interest Amid Strategic Expansion

The stock of Nebius Group (NBIS) has become a focal point for investors weighing the tension between rising short interest and the company's aggressive bets on AI infrastructure. As of November 2025, short sellers have accumulated 26.09 million shares, representing 11.07% of the float, with a short interest ratio of 1.29 days to cover. This marks an 8.7% increase in short positions since October 2025, reflecting growing bearish sentiment. Yet, Nebius' third-quarter 2025 results-despite missing revenue estimates-highlighted a 355% year-over-year revenue surge to $146.1 million, alongside a $5 billion capital expenditure (capex) plan to expand AI infrastructure. This divergence between market skepticism and strategic ambition raises critical questions: Is the recent sell-off a warning sign, or does it present an opportunity for long-term investors?

Short Interest: A Barometer of Near-Term Concerns

The elevated short interest in Nebius Group underscores investor concerns about its near-term financial health. As of November 14, 2025, 12.36% of the float was shorted, with 43.49% of short volume occurring off-exchange, including dark pool trades. This suggests a degree of caution among institutional players, as evidenced by filings from Susquehanna International Group, Citadel Advisors, and UBS Group. The short borrow fee rate of 3.29% further indicates that lenders are charging a premium to borrow shares, a metric often associated with heightened bearish activity.

However, the short interest ratio of 1.29 days to cover remains relatively low compared to historical averages for high-growth tech stocks. This implies that while short sellers are active, they are not overleveraged, reducing the likelihood of a dramatic short squeeze. The modest ratio also suggests that the market has not yet reached a tipping point where short positions dominate the stock's liquidity profile.

Growth Fundamentals: A High-Stakes Bet on AI Infrastructure

Nebius' Q3 2025 results reveal a company pivoting aggressively toward AI infrastructure. The $146.1 million revenue figure, though below the $155.1 million analyst estimate, was driven by a strategic shift in accounting practices rather than operational underperformance. More notably, the company's adjusted EBITDA loss narrowed to $5.2 million in Q3 2025 from $45.9 million in the prior-year period, signaling incremental progress in cost management.

The $5 billion capex plan-up sharply from an initial $2 billion target- is a testament to Nebius' ambition. With 80% of the budget allocated to GPU deployment, the company is positioning itself to capitalize on the surging demand for AI compute power. This strategy has already yielded significant contracts, including a $3 billion AI infrastructure deal with Meta Platforms and a $19 billion agreement with Microsoft. These partnerships not only validate Nebius' technical capabilities but also provide a revenue runway that could offset current losses in the long term.

Tension Between Bearish Sentiment and Bullish Fundamentals

The juxtaposition of rising short interest and robust growth fundamentals creates a complex investment landscape. On one hand, the company's capital consumption- $450 million in the first nine months of 2025-raises concerns about liquidity and debt sustainability. Nebius is funding its expansion through corporate debt, asset-backed financing, and an at-the-market equity offering, strategies that could backfire if capital markets tighten. On the other hand, the AI infrastructure market is expanding rapidly, with competitors like CoreWeave and Microsoft also ramping up investments. Nebius' ability to secure high-profile clients and scale its GPU deployment may ultimately outweigh near-term financial risks.

The short interest data itself is not a definitive bearish signal. A short interest ratio of 1.29 suggests that short sellers are not overextended, and the relatively low percentage of the float sold short 12.36% indicates that the stock remains largely in long-term investor hands. The high short borrow fee rate, while costly for short sellers, could also act as a self-correcting mechanism, discouraging excessive shorting and stabilizing the stock.

Investment Viability: A Calculated Long-Term Play

For long-term investors, the key question is whether Nebius can execute its AI infrastructure vision without compromising financial stability. The company's Q3 2025 results demonstrate that it is on track to exit 2025 with positive adjusted EBITDA at the group level, albeit with a full-year loss. This trajectory aligns with the typical growth patterns of infrastructure-focused tech firms, which often prioritize market capture over immediate profitability.

However, the risks are non-trivial. Nebius' reliance on capital markets to fund its $5 billion capex plan exposes it to interest rate volatility and potential refinancing challenges. Additionally, the company's net income loss widened to nearly $120 million in Q3 2025, highlighting the trade-offs between aggressive expansion and shareholder returns.

Conclusion: A Divergent Path Forward

Nebius Group's contrasting market signals reflect a company at a crossroads. The rising short interest and earnings-driven sell-off underscore near-term vulnerabilities, particularly in liquidity and profitability. Yet, the company's strategic investments in AI infrastructure-bolstered by landmark deals with Meta and Microsoft-position it to benefit from the long-term tailwinds of the AI revolution.

For investors, the decision hinges on risk tolerance. The current sell-off may offer an entry point for those confident in Nebius' ability to scale its AI infrastructure and secure favorable financing terms. However, the elevated short interest and capital demands necessitate a cautious approach, with close monitoring of the company's capex execution and debt management. In a sector defined by rapid innovation and capital intensity, Nebius' success will ultimately depend on its ability to balance ambition with financial prudence.