Seeking Alpha Touts Nebius AI Moat Amid DeepValue Caution on Risks

What happened

On December 12, 2025, Seeking Alpha published a bullish article labeling Nebius a strong long-term buy, citing its AI infrastructure moat, partnerships with Microsoft and Meta, and increased CapEx guidance to $5 billion for FY2025. The article portrays these elements as validating technological edge and supporting rapid growth, with a focus on a robust balance sheet. However, the DeepValue master report, derived from SEC filings, reveals that Nebius remains deeply loss-making, with a 2024 net loss of $393.5 million on revenue of only $117.5 million, despite recent top-line growth. Critical risks include high customer concentration (38% of revenue from top clients), adverse internal controls over financial reporting, supplier dependency (73% of capex from one source), and a rich valuation with a P/E over 110x. This disconnect highlights that promotional content may obscure underlying financial vulnerabilities and execution hurdles.

Implication

The Seeking Alpha article may fuel speculative optimism, but it glosses over Nebius's fundamental weaknesses, such as operating losses and negative free cash flow that threaten sustainability. Partnerships with Microsoft and Meta offer revenue visibility but intensify dependency risks, requiring flawless execution on large-scale capacity deals like the Vineland facility. Aggressive CapEx increases could worsen cash burn without a clear path to profitability, especially given competitive pressures from hyperscalers. Governance concerns from adverse ICFR and high customer concentration amplify downside potential in case of operational missteps. With the stock trading at a premium valuation, investors are better off waiting for tangible improvements in unit economics and risk mitigation before committing capital.

Thesis delta

The Seeking Alpha article does not alter the core investment thesis, as it relies on promotional claims rather than new financial data or risk mitigation. The DeepValue report's 'WAIT' recommendation remains intact, emphasizing that execution risks, financial losses, and valuation excesses persist unchanged.