Nebius: Why I Am Not Turning Bearish Amid Dilution

Dilantha De Silva
13.3K Followers

Summary

  • Nebius Group N.V. has aggressively raised capital to fund AI cloud capacity expansion, spooking investors with recent dilution.
  • Capital availability and rapid scaling are critical competitive advantages in the AI cloud sector. This justifies the aggressive investments. But NBIS investors should not consider this an investment signal.
  • Remaining bullish on Nebius depends on evidence of margin expansion and utilization-driven revenue growth exceeding dilution risks.
  • From a quantitative perspective, isolating dilution without evaluating earnings growth arising from raised capital is a mistake.

Artificial intelligence circuit board 5

Jonathan Kitchen/DigitalVision via Getty Images

Nebius Group N.V. (NBIS) has been a market darling over the past 18 months. Before Nebius came into the spotlight, I invested in the company back in December 2024 at a stock price of around $21. Never

This article was written by

Dilantha De Silva
13.3K Followers
Dilantha De Silva is an experienced equity analyst and investment researcher with over 10 years in the investment industry. He writes insightful articles for Seeking Alpha, GuruFocus, TipRanks, and ValueWalk, with a significant following on Seeking Alpha. Dilantha’s expertise spans across various sectors, with a particular focus on small-cap stocks that are overlooked by Wall Street analysts. He is a CFA Level III candidate and holds qualifications from the Chartered Institute for Securities and Investment (CISI). Dilantha has been featured on CNBC and Bloomberg, and his work has been prominently showcased on Nasdaq, Yahoo Finance, and other leading investment platforms. When not analyzing stocks and writing, Dilantha is involved in private equity transactions, including acquiring and managing businesses.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of NBIS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.