Shares of Nebius Group (NASDAQ:NBIS) took a hit, paralleling the decline of CoreWeave (NASDAQ:CRWV) after the latter released a disappointing earnings report last night.
No specific news emerged about Nebius, but both stocks are part of a relatively new and unproven sector, meaning their prices tend to fluctuate together. While both companies are expanding quickly, they’re also running in the red as they heavily invest in data centers to offer AI computing power.
As of 2:32 p.m. ET, Nebius had dropped 14.9%, and CoreWeave was down by 21.9%.
The concept of AI Cloud, which entails companies like Nebius and CoreWeave purchasing GPUs to lease that computing capacity to hyperscalers and AI startups, is still in its infancy.
This venture has led to impressive revenue growth, even as both companies wrestle with significant losses, having borrowed billions for the construction of data centers in response to rising AI computing demands.
Similar to CoreWeave, Nebius released its earnings report earlier this month, which did not meet expectations, further disappointing investors.
These stocks are notably volatile due to the inherent risks in the business model, leaving investors uncertain about their valuations.
Despite this, analysts predict Nebius will maintain strong growth, projecting a 531% increase to $3.35 billion by 2026. Nebius, although smaller than CoreWeave, is on a faster growth trajectory.
If the stock can sustain its rapid growth, it may continue to capture investors’ interest. However, Nebius will need to show improvement in its earnings to become a clear winner.
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