Nebius Stock Plunged 31% Last Month. Is It Time to Buy?

Nebius Group (NBIS) dropped 31.1% in July, erasing a chunk of its 125% year-to-date gain as investors reassessed the AI infrastructure play's valuation and cash burn. The stock now trades at 14 times forward sales despite mounting concerns over profitability.

The company is scaling aggressively, targeting expansion from 1 gigawatt to more than 4 gigawatts of projected power capacity to meet surging demand for AI data center infrastructure. But that growth comes at a steep price: Nebius spent $2.5 billion in Q1 alone on GPUs and hardware, pressuring margins as operational costs climb.

The Motley Fool flags significant downside risk if cloud customers scale back capacity commitments, a vulnerability for a company trading at a premium sales multiple while still unprofitable. The combination of heavy capital expenditure and elevated valuation leaves little room for execution missteps or demand softness in the AI infrastructure buildout.