Nebius Group (NBIS) Plunges 5.8% Amid AI Partnership Hype: Is the Selloff a Buying Opportunity?

Summary
• Nebius Group (NBIS) trades at $127.55, down 5.84% intraday after opening at $131.79
• Intraday range spans $125.75 to $132.00, reflecting volatile trading
• Microsoft’s $17B AI infrastructure deal with Nebius Group dominates headlines
• Analysts debate whether the stock’s 335% YTD rally has priced in future growth
• Options market sees heavy put buying, with 20 contracts trading above $125 strike prices

Nebius Group’s sharp intraday decline has sparked a frenzy of speculation among traders and investors. The stock’s 5.84% drop comes despite a landmark $17 billion AI infrastructure partnership with Microsoft, which analysts argue should bolster long-term revenue visibility. With the stock trading near its 52-week low of $14.09 and a dynamic P/E of 34.01, the selloff raises critical questions about valuation sustainability and market sentiment shifts in the AI infrastructure sector.

Profit-Taking and Valuation Concerns Trigger Sharp Correction
Nebius Group’s intraday selloff reflects a confluence of profit-taking from its 335% YTD rally and growing skepticism about its valuation. Despite the Microsoft partnership securing long-term revenue, investors are recalibrating expectations after the stock traded at a 115x P/S ratio. Analysts at Simply Wall St note the $153 fair value estimate implies an 18% upside, but this premium may not justify the risks of execution delays or regulatory headwinds. The recent $1B convertible note issuance also raises concerns about dilution, with the notes’ 40% conversion premium over current prices amplifying short-term volatility. Meanwhile, the broader market’s rotation into value stocks and away from high-growth tech plays has exacerbated the sell-off.

IT Services Sector Mixed as Microsoft Drives AI Infrastructure Narrative
The IT Services sector remains polarized, with Microsoft (MSFT) down 0.92% intraday despite its strategic partnership with Nebius Group. While Microsoft’s involvement validates AI infrastructure demand, its modest decline suggests market caution about capital-intensive growth bets. Nebius Group’s 3.45 beta highlights its heightened sensitivity to sector-wide shifts, contrasting with Microsoft’s defensive positioning. The sector’s broader challenges—rising interest rates and regulatory scrutiny of AI—add context to Nebius Group’s correction, as investors weigh growth potential against execution risks.

Options and Technicals Signal Strategic Entry Points Amid Volatility
• 200-day MA: $49.11 (far below) • RSI: 71.15 (overbought) • MACD: 12.94 (bullish) • Bollinger Bands: $87.03–$140.42 • Implied Volatility: 82.92%–136.28%

Technical indicators suggest Nebius Group is testing critical support levels. The RSI’s overbought reading (71.15) and MACD’s positive divergence hint at potential short-term exhaustion in the selloff. Key levels to monitor include the 200-day MA ($49.11) and the $125 psychological threshold. For options traders, the high implied volatility environment favors short-term directional plays. Two top options stand out:

• NBIS20251017P125 (Put): Strike $125, Expiry 10/17, IV 109.91%, Leverage 29.83%, Delta -0.3878, Theta -0.1595, Gamma 0.025956, Turnover $208,754
- High leverage ratio (29.83%) amplifies gains in a 5% downside scenario
- Moderate delta (-0.3878) balances sensitivity to price moves
- High gamma (0.025956) ensures responsiveness to volatility shifts
- Projected payoff: $125 - $121.17 = $3.83/share if price drops to $121.17

• NBIS20251017P127 (Put): Strike $127, Expiry 10/17, IV 112.19%, Leverage 24.02%, Delta -0.4417, Theta -0.1154, Gamma 0.026201, Turnover $43,148
- Strong IV (112.19%) reflects market anticipation of further declines
- High gamma (0.026201) enhances delta responsiveness to price swings
- Projected payoff: $127 - $121.17 = $5.83/share in a 5% downside scenario

Aggressive bulls may consider NBIS20251017C127 (Call) at $127 strike if the stock rebounds above $130. For conservative plays, the NBIS20251017P125 put offers a high-leverage, high-gamma position to capitalize on the selloff.

Backtest Nebius Group Stock Performance
Below is the event-study back-test you requested. (The interactive panel lets you explore cumulative returns, win-rate curves, and per-event drill-downs.)Key takeaways (30-day event window):• 73 plunges met the –6 % intraday filter. • Average close-to-close return: –1.4 % on day 1, turning positive by day 14 and reaching +14.2 % by day 30. • Win-rate stays below 50 % for the first week, then improves to ~57 % by day 20+. • None of the average excess returns over the benchmark are statistically significant at conventional levels; the early negative drift is significant at day 1-2 only.Interpretation: NBIS tends to rebound after sharp intraday sell-offs, but the edge is modest and noisy; timing entries within the first few days remains risky.Feel free to dig into the panel or let me know if you’d like to test alternative thresholds or holding windows.

Act Now: Nebius Group at Pivotal Crossroads—Is the Selloff a Catalyst for Growth?
Nebius Group’s 5.84% intraday drop has created a critical inflection point for investors. While the stock’s 335% YTD rally has priced in aggressive growth assumptions, the current correction offers a chance to reassess fundamentals. The Microsoft partnership remains a tailwind, but execution risks—capital intensity, regulatory scrutiny, and valuation concerns—demand caution. Technicals suggest a potential rebound above $130 could reignite bullish momentum, while a breakdown below $125 may trigger deeper selling. Sector leader Microsoft’s -0.92% move underscores broader market caution. For traders, the NBIS20251017P125 put and NBIS20251017P127 put offer high-leverage, high-gamma positions to capitalize on the selloff. Watch for $125 support and Microsoft’s directional bias to gauge the next move.