Nebius shares fell 10% on Thursday following the release of its third-quarter earnings report, despite the company beating revenue expectations [1]. The neocloud provider reported Q3 revenue of $980.8 million, exceeding the LSEG consensus estimate of $907.5 million, representing a 571% year-over-year revenue jump [1]. However, the company's disappointing forward guidance overshadowed the beat, with CEO Arkady Volozh indicating that fiscal year 2026 revenue would come in at the low end of the company's $3 billion to $3.4 billion guidance range, below FactSet's expectation of $3.35 billion [1].
The primary driver of the stock decline was Nebius' significantly increased capital expenditure guidance. The company now expects FY2026 capex of $27 billion, substantially higher than its previous guidance of $20 billion to $25 billion and above the FactSet expectation of $23.85 billion [1]. More dramatically, Nebius projected FY2027 capex of $40 billion to $45 billion, far exceeding FactSet's expectation of $28.77 billion [1]. On the profitability front, Nebius reported a net loss of $37.5 million, or 13 cents per share, compared with a loss of $119.6 million, or 50 cents per share, in the prior year [1].
The market reaction to Nebius' results created broader volatility in the neocloud sector. While CoreWeave and IREN had posted better-than-expected results in the preceding week, boosting investor sentiment, the neocloud companies had experienced steep selloffs in recent weeks amid concerns about the sustainability of the artificial intelligence buildout [1]. On Wednesday prior to Nebius' report, the sector rallied with CoreWeave surging nearly 25%, Nebius climbing 15%, Applied Digital rising more than 7%, and IREN adding nearly 6% [1]. However, each of these stocks fell in Thursday premarket trading following the Nebius earnings announcement [1]. The results underscore investor concerns about the massive capital requirements and execution risks facing neocloud providers as they race to expand data center capacity.
CONCLUSION
Nebius' disappointing guidance and sharply elevated capex outlook triggered a 10% stock decline despite beating revenue estimates, signaling investor concerns about the sustainability of aggressive AI infrastructure buildout plans. The company's projection of $27 billion in 2026 capex and $40-45 billion in 2027 capex substantially exceeds prior guidance and analyst expectations, raising questions about profitability timelines and capital efficiency across the neocloud sector.