Nebius Group's Valuation Metrics: Is the Stock Overvalued or Undervalued?

Nebius Group's share price has surged 79.8% over the last 30 days and 87.7% over the past five years. However, the company's valuation metrics score only 2 out of 6, indicating it is undervalued by only two measures. The discounted cash flow (DCF) model estimates Nebius Group's intrinsic value at $140.25 per share, implying a 16.1% discount to its current price. Despite this, the stock may still be undervalued based on long-term cash flow potential.

Nebius Group's share price has surged 79.8% over the last 30 days and 87.7% over the past five years, driven by a significant Microsoft AI infrastructure deal and ambitious expansion plans. Despite this strong performance, the company's valuation metrics score only 2 out of 6, indicating it may be undervalued by some measures. The discounted cash flow (DCF) model estimates Nebius Group's intrinsic value at $140.25 per share, implying a 16.1% discount to its current price.

Nebius Group, a Netherlands-based tech firm, has seen its stock price climb from around $14 last October to roughly $128 by early October 2025, near all-time highs Nebius Group’s Meteoric Rise: $17B Microsoft AI Deal Propels Stock to New Highs – What’s Behind the Hype?^[1]. The stock's high volatility (beta ~3.5) reflects the explosive growth and risk associated with the company's AI cloud business Nebius Group Stock Soars on Microsoft AI Deal, $3B Funding Plan & Analyses: What You Need to Know on 2 October 2025^[2]. In September, Nebius inked a 5-year, $17.4 billion AI infrastructure contract with Microsoft, triggering a one-day 44% stock jump to record levels . The deal, which can expand to $19.4 billion, gives Microsoft access to Nebius's high-performance cloud and over 100,000 Nvidia GPUs, underscoring surging AI data center demand .

To finance its expansion, Nebius announced a $3 billion plan – $2 billion in convertible notes plus $1 billion in new equity – to scale its AI cloud capacity . Proceeds will fund more Nvidia hardware, new data centers, and land as Nebius aims to grow capacity from 190 MW to 1 GW by 2026 , a massive buildout to meet contract obligations and AI demand.

Analysts are largely optimistic about Nebius's prospects. The consensus rating is "Buy," and recent upgrades are rolling in . BWS Financial hiked its price target from $90 to $130 after the Microsoft deal, calling Nebius "significantly de-risked" . Despite the bullish sentiment, experts warn Nebius will burn cash to scale and likely issue more debt/equity, which could dilute shareholders .

Nebius's Q2 2025 revenue was $105.1 million, up 625% year-over-year (and +106% QoQ) amid an AI computing boom . Though still posting a net loss (EPS –$0.38 vs –$0.41 expected) as it reinvests in growth , analysts project explosive growth ahead – a Nasdaq analysis sees revenue hitting $4.25 billion by 2027 (a 231% CAGR), with positive EBITDA by 2026 . Nebius itself has guided for ~$1 billion in annual recurring revenue by 2026 and turning EBITDA-positive that year .

The Microsoft AI infrastructure deal cements Nebius as a credible alternative to the big cloud "hyperscalers." Microsoft, facing an AI server shortage, is outsourcing hefty GPU workloads to Nebius – a role previously dominated by players like CoreWeave. Nebius's AI platform already serves big-name customers like Cloudflare and Shopify, among others, proving its ability to handle demanding enterprise AI tasks .

While Nebius's rapid ascent has drawn excitement from market watchers, prudent voices remind investors of the execution risks. Building AI supercomputers doesn't come cheap or easy – Nebius will be pouring billions into data centers, chips, and talent in the next couple of years. Any hiccup in delivering capacity (or if the Microsoft project falters) could impact its sky-high growth projections. There's also the competition factor: startups like CoreWeave and cloud giants like Amazon and Google are racing to expand AI infrastructure, potentially squeezing margins or slowing Nebius's client wins .

For now, though, the market's mood remains optimistic. Nebius is frequently cited as a standout of 2025's AI stock frenzy – Zacks Investment Research even named it one of the year's top three performing stocks across the market . The stock's momentum, bolstered by AI hype and real revenue traction, has made Nebius a focal point for both tech investors and AI industry watchers.