Motley Fool Hypes Nebius AI Growth Amid Rally, But DeepValue Report Highlights Persistent Execution and Funding Risks

What happened

The Motley Fool recently published an article questioning if Nebius stock is still a buy after its explosive rally, focusing on the company's rapid scaling of AI infrastructure and billions in contracted revenue from hyperscalers. However, the latest DeepValue master report provides a critical counterpoint, rating Nebius as a 'POTENTIAL SELL' with a conviction of 4.0, due to significant execution and funding risks. The report emphasizes that despite multi-billion dollar contracts with Microsoft and Meta, Nebius faces deepening operating losses, negative free cash flow, and reliance on dilutive equity issuance to fund its aggressive capacity build-out. Market sentiment has shifted from initial hype over contract wins to increased scrutiny of dilution, potential construction delays, and the lack of a clear profitability inflection. This contrast underscores the disparity between optimistic media narratives and the underlying financial vulnerabilities detailed in regulatory filings.

Implication

The article's bullish tone overlooks Nebius's persistent negative EBITDA and free cash flow, which erode shareholder value and heighten reliance on external capital. Execution risks, such as delays in energizing the Vineland facility or grid constraints, could derail the path to 800 MW connected power by 2026, undermining revenue from hyperscaler contracts. Additional equity raises, including the 25 million-share ATM program, may dilute existing holders without matching EBITDA growth, compounding per-share value erosion. Customer concentration with Microsoft and Meta amplifies downside risk if either reduces commitments, potentially collapsing the revenue backbone for expansion. Therefore, prospective investors should wait for a lower entry point or clearer signs of sustainable profitability, while existing holders consider trimming positions above $115 to manage risk.

Thesis delta

The Motley Fool article does not introduce new fundamental information that alters the investment thesis from the DeepValue report. Nebius's valuation still assumes flawless execution on hyperscaler contracts and rapid profitability inflections, ignoring the material risks of dilution, funding gaps, and operational setbacks already highlighted. Thus, the thesis remains unchanged, reinforcing the 'POTENTIAL SELL' rating and the need for caution at current prices.