Nebius Group Sets Record $4.28B Turnover Amid Burry Short Squeeze

Market Snapshot

Nebius Group (NBIS) experienced a modest decline on August 7, 2026, with its shares closing down 1.01% in late trading. The stock traded in a range between an intraday low of approximately $180.63 and a mid-day high near $189.88, settling around $187.97. Despite the slight percentage drop, trading activity remained exceptionally vigorous, with turnover reaching $4.28 billion. This volume represented a 31% increase above the average daily session volume of roughly 17.3 million shares, marking it as the highest turnover among all stocks in the market for the day. The stock has now retreated more than 37% from its year-to-date high, reflecting a period of heightened volatility and investor caution ahead of critical financial disclosures.

Key Drivers

The primary catalyst for Nebius Group’s recent price pressure is the public disclosure of a short position by Michael Burry, the investor famously known for predicting the 2008 housing crisis. On August 6, Burry revealed via his Substack newsletter, Cassandra Unchained, that he had initiated a short position in Nebius at approximately $211.77 per share. Unlike his previous bearish bets on other AI infrastructure firms where he utilized put options, Burry opted for a conventional short sale of Nebius shares. He cited exorbitant option premiums, with implied volatility exceeding 100% on certain contracts, making direct equity shorting a more cost-effective vehicle for expressing his negative outlook. This move has significantly amplified market scrutiny on the company’s valuation and fundamental financial health.

Burry’s bearish thesis centers on structural concerns regarding the economics of AI infrastructure investments, specifically focusing on operational execution risks, escalating debt levels, and massive capital expenditure obligations. He argues that building and maintaining data centers requires enormous upfront capital, extended lease agreements, and frequent hardware refreshes. The investor contends that these financial commitments could severely erode profitability margins if revenue expansion fails to keep pace with infrastructure-related expenses. Burry highlighted that Nebius faces a "ton of execution risk" due to the high costs and long lease terms inherent in the data center business, alongside the difficulty of securing long-term customer commitments.

A central component of Burry’s argument involves the accounting treatment of expensive GPU hardware. He posits that accelerating innovation cycles in artificial intelligence may render existing hardware economically obsolete faster than traditional accounting frameworks anticipate. If companies under-depreciate their GPUs, their reported earnings may appear stronger than the underlying economic reality supports. Burry estimates that for companies in the AI infrastructure sector, earnings could be overstated by significant margins due to these depreciation assumptions. This skepticism extends to Nebius’s broader strategy, suggesting that the gap between reported financials and actual hardware replacement cycles is a critical vulnerability.

Despite these headwinds, Nebius Group has demonstrated impressive top-line growth, which has fueled its expansion plans and attracted bullish counter-arguments. In the first quarter, revenue surged nearly seven times year-over-year to approximately $400 million, with deferred revenue climbing roughly 150% quarter-over-quarter to $686 million. The company currently reports annualized recurring revenue approaching $1.9 billion and has secured significant AI computing partnerships, including a $27 billion agreement with Meta Platforms. These contracts provide substantial revenue visibility and financial support for ongoing infrastructure buildout, bolstering the confidence of investors who believe in the sustained demand for AI computing capabilities.

However, the path to profitability remains fraught with challenges. Nebius’s long-term debt obligations reportedly doubled to $8.4 billion, while capital expenditure projections have reached $25 billion. The company is expected to generate negative free cash flow as it continues its aggressive spending, with the last quarter recording a negative cash flow of over $3.3 billion. Analysts expect revenue to jump 446% in the upcoming second quarter to $574 million, but this growth must translate into durable margins to validate the current valuation. The upcoming earnings report on August 12 will be a crucial milestone, testing whether Nebius can successfully transform rapid expansion into sustainable financial performance amidst intensifying competition from other data center providers and potential market saturation.