Shares of Nebius declined by approximately 10% on Thursday following the release of its third-quarter financial results. While the company, one of the largest publicly traded neocloud providers, announced revenue figures that exceeded analyst estimates, investors reacted negatively to its forward-looking guidance. The stock had previously seen a sharp rally, but the new outlook suggested a more cautious approach to expansion.
In the third quarter, Nebius generated $980.8 million in revenue, surpassing the LSEG consensus estimate of $907.5 million. This represented a substantial 571% increase compared to the same period in the previous year. The company reported a net loss of $37.5 million, equating to 13 cents per share. This loss was narrower than the $119.6 million net loss, or 50 cents per share, recorded a year earlier. It remained unclear immediately if the current loss per share was directly comparable to the 69 cents expected by analysts.
For the full fiscal year 2026, CEO Arkady Volozh stated in a letter to shareholders that the company expects revenue to land at the lower end of its projected range of $3 billion to $3.4 billion. This outlook fell short of the FactSet consensus, which had anticipated full-year revenue of $3.35 billion. Looking ahead to 2027, Nebius provided an initial revenue forecast of $12 billion to $13 billion, describing the pace as conservative relative to its build-out plans. FactSet analysts had expected 2027 revenue to be approximately $12.09 billion.
The primary driver of the stock's decline appears to be the company's increased capital expenditure projections. Nebius now expects to spend $27 billion on capital projects in fiscal year 2026, a significant rise from its previous guidance of $20 billion to $25 billion and well above the FactSet estimate of $23.85 billion. For fiscal year 2027, the company anticipates spending between $40 billion and $45 billion, a figure that greatly exceeds the FactSet expectation of $28.77 billion.
Nebius's announcement follows recent strong results from competitors CoreWeave and IREN, which had reported better-than-expected financials over the previous week. Those reports initially boosted the entire neocloud sector, which had suffered from steep sell-offs due to concerns about the sustainability of artificial intelligence infrastructure spending. On Wednesday, CoreWeave surged nearly 25%, Nebius climbed 15%, Applied Digital rose more than 7%, and IREN added nearly 6%.
However, the momentum reversed in premarket trading on Thursday after Nebius released its report, causing each of these stocks to fall. The sector faces ongoing financial scrutiny, with CoreWeave recently noting that it expects to keep parent-level debt financing under $5 billion through 2027. This comes after its bond yields spiked past 16% last week, highlighting market sensitivity to debt levels in the industry.
Political factors have also contributed to volatility as Nebius competes with rivals to open new data centers. Last week, U.S. voters approved dozens of ballot initiatives aimed at restricting the development of such facilities. Additionally, Democrats secured sweeping victories in both houses of Congress, potentially shaping future regulatory landscapes for the tech infrastructure sector.
The sector is also navigating uncertainty surrounding Nvidia, a key partner that has invested in neocloud companies and backed several of their projects. According to a filing, Nvidia held approximately $329 million in Nebius shares at the end of June. Late Wednesday reports indicated that Nvidia's board was planning to push out co-founder and CEO Jensen Huang following revelations about personal affairs, including one with an alleged Chinese spy.
Nebius stated that it raised $5.75 billion in debt financing during the quarter. Company executives are scheduled to discuss the results and provide further guidance on a conference call beginning at 8 a.m. ET.
The company's Chief Revenue Officer noted in a video interview that compute demand continues to run ahead of supply, underscoring the ongoing pressure on infrastructure providers to scale rapidly despite the financial and political headwinds.
