Why Nebius Stock Skyrocketed Today
Key Points
The AI boom is fueling Nebius Group's expansion.
Short-sellers are getting hammered.
Shares of Nebius Group (NASDAQ: NBIS) spiked on Wednesday after the cloud computing provider delivered dazzling growth metrics.
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Torrid growth
Nebius has emerged as a key beneficiary of the artificial intelligence (AI) infrastructure race.
Semiconductor chip shortages and other supply chain bottlenecks have led to capacity constraints among the major hyperscalers. That's driven a lot of business to so-called neoclouds -- specialized suppliers of high-performance computing services specifically designed for AI workloads.
Nebius has some of the most impressive growth among the neoclouds, fueled by its full-stack platform, which offers proprietary hardware, ultra-fast data storage, low-latency networking, and an array of developer tools.
Its second-quarter revenue soared 454% year over year to $582 million.
"Demand for AI capacity continues to grow exponentially," CEO Arkady Volozh said in a letter to shareholders.
Still, Nebius is not yet profitable. But its adjusted net loss narrowed to $33 million from $92 million in the year-ago quarter.
The company also generated earnings before interest, taxes, depreciation, and amortization (EBITDA) of $236 million, up from a loss of $21 million in the prior-year period.
A short squeeze could be at play
Nebius has become a battleground stock. Bulls point to the massive profit potential for AI infrastructure providers, while bears raise concerns about the high costs of expansion and the risk that this heavy spending may not produce the returns investors expect.
Nebius, in turn, is a heavily shorted stock. Those bets might be adding fuel to this rally, as short-sellers need to buy stock to close out their positions.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.