Nebius Q3 Preview: Can Microsoft's $17B Deal Power Another Breakout?

This article first appeared on GuruFocus.

Nebius Group (NASDAQ:NBIS) reports third-quarter 2025 results before the market opens on November 11. Analysts expect a loss of $0.56 per share on $155 million in revenue. This marks a top-line increase of 260% YoY. The stock is up roughly 300% year to date and almost 500% over the past twelve months, powered by optimism around the company's AI cloud capacity expansion and its recent landmark deal with Microsoft.

The Microsoft agreement, valued at $17.4 billion and potentially rising to $19.4 billion through 2031, will see Nebius lease GPU capacity from its Vineland, New Jersey, data center to power Microsoft's AI services. This contract alone exceeded Nebius's market capitalisation at the time of signing, underscoring the scale of hyperscaler demand for AI infrastructure. Investors will be looking for details on capacity utilisation and margins.

Beyond Microsoft, investors will focus on contract monetisation (when and how the Microsoft deal begins contributing to top line), margin and cash-flow dynamics (capex, build-out costs, GPU-supply risk) and pipeline diversification (which other hyperscalers or large labs are coming on board). Management's commentary around the timing of capacity coming online and scale economics once large contracts run will be critical. Analysts will also watch for any updates on the company's financing strategy, since future raises or debt deals could dilute existing shareholders.

Valuation remains stretched given the company's early stage. Nebius is still generating relatively small revenue compared to its market cap. For investors, the real question now is whether those huge infrastructure commitments can start producing real cash flow sooner than expected and whether management can keep projects on track as competition in the AI-cloud race keeps heating up.

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