As of Monday’s close, Nebius shares had slid over 28% from their 52-week high set just the previous week, driven by a combination of a market-wide sell-off and mixed analyst reactions to the company’s Q4 and full-year 2024 financial results.
With the stock now testing its 50-day SMA, investors might be asking whether this pullback presents a compelling long-term buying opportunity. Let’s dive into the latest catalysts and the road ahead for Nebius.
Revenue Surges, But Profitability Remains a Challenge
On February 20, 2025, Nebius Group N.V. reported its financial results for Q4 and full-year 2024. The numbers were a mixed bag, showcasing impressive revenue growth but continued struggles with profitability. For Q4 2024, Nebius reported revenue of $37.9 million, reflecting a staggering 466% year-over-year increase. The company’s core AI infrastructure segment surged 602% compared to Q4 2023.
Despite this robust top-line growth, Nebius posted an adjusted EBITDA loss of $75.5 million, a modest 7% improvement from the $81.3 million loss in the same quarter the previous year. Net loss from continuing operations climbed to $136.6 million, marking a 55% increase year-over-year. Capital expenditures were also substantial, reaching $417.6 million in Q4 as Nebius continued investing heavily in GPU procurement and data center expansion.
For the full year 2024, revenue came in at $117.5 million, a sharp 462% increase from 2023. The adjusted EBITDA loss totaled $266.4 million, and the net loss from continuing operations stood at $396.9 million. The company ended the year with a solid cash position of $2.4 billion, bolstered by a $700 million funding round in December 2024.
Looking ahead, Nebius provided ambitious guidance for 2025, projecting an annualized run-rate (ARR) of $220 million by March and scaling to $750 million to $1 billion by December. The company also expects full-year 2025 revenue to land between $500 million and $700 million. While profitability remains elusive, Nebius aims for near-breakeven EBITDA by the end of 2025, supported by plans to expand data center capacity to 100 megawatts, with the potential to scale to over 300 megawatts.
Analyst Sentiment: A Divided Outlook
Nebius’s Q4 earnings report prompted mixed reactions from the small pool of analysts covering the stock. BWS Financial maintained its Buy rating and raised its price target from $51 to $60 on February 21. The firm highlighted Nebius’s strong Q1 guidance and its path to a $1 billion ARR by year-end, emphasizing its growing AI infrastructure capabilities despite recent volatility.
In contrast, Hedgeye Global Technology, once a bullish supporter of Nebius, reversed its stance on February 24, removing its long position. The firm cited “surprising vision misalignment from management” and “light guidance” from the earnings call as reasons for the shift. This unexpected downgrade added to selling pressure, amplifying the post-earnings slide.
Following its earnings, another firm initiated coverage of the company. DA Davidson Analysts initiated stock coverage with a Buy rating and a $50 price target. The firm added the stock within D.A. Davidson’s DaVinci initiative for deep tech businesses, noting that Nebius is “emerging as one of the first true alternatives to hyperscaler-dominated AI compute.”
The contrasting views reflect both the promise and the risks tied to Nebius’s ambitious growth strategy, rapid revenue expansion coupled with the challenge of balancing heavy capital investments and profitability.
The Long-Term Story Remains Intact
Despite the recent pullback, there are compelling reasons to remain optimistic about Nebius’s long-term prospects. Nebius’s core business is well-positioned to benefit from the surging demand for AI infrastructure, especially as companies continue ramping up AI deployments. The company also enjoys solid institutional backing, with NVIDIA’s stake and positions from Soros Capital, Marshall Wace, and Columbus Hill reflecting strong confidence in its future.
Robust guidance pointing to a $1 billion ARR target by year-end signals Nebius’s intent to scale aggressively. Furthermore, a key upcoming catalyst is NVIDIA’s earnings report this Wednesday. As a significant AI chip supplier, market leader, and shareholder in Nebius, NVIDIA’s outlook could offer critical insights into the overall health of the AI sector and potential tailwinds for Nebius.
There’s a fatal flaw at the heart of the AI revolution…
With AI continuing to explode in popularity, tech companies are all scrambling to build hundreds of new mega data centers to keep up with the demand for training and using new AI models.
But that’s where the problem is. I call it “The AI Keystone”.
The technology sector and the rapidly growing field of artificial intelligence (AI) have become cornerstones of modern economic growth.
During recent market volatility and shifting investor sentiment, one company has increasingly emerged as a critical market barometer: NVIDIA Corporation (NASDAQ: NVDA).
NVIDIA is more than just a chipmaker. The company’s performance provides valuable insight into the overall health and direction of the broader tech sector, especially the AI-driven computing revolution. In the financial markets, barometers are indicators that reflect the general trend or condition of the market.
NVIDIA’s rise to this status is a testament to its technological prowess and strategic positioning. The anticipation surrounding NVIDIA’s upcoming fourth-quarter earnings report highlights the significance of the marketplace on this company’s performance.
Charting NVIDIA’s Course to AI Dominance
NVIDIA’s journey began in 1993, founded by Jensen Huang, Chris Malachowsky, and Curtis Priem, with a focus on graphics chips for the emerging gaming industry. Its early innovations, like the NV1 chip and the invention of the Graphics Processing Unit (GPU) in 1999, revolutionized the visual computing market.
NVIDIA’s potential was further unleashed when the company discovered the massive potential of GPUs for parallel processing, which was essential for complex calculations in AI and high-performance computing.
This strategic foresight propelled NVIDIA to leadership positions in several high-growth sectors. The company’s GPUs are now the driving force behind many AI applications, including machine learning, deep learning, and neural networks.
In the data center market, NVIDIA’s platforms provide the essential infrastructure for cloud computing and AI workloads. While gaming remains a vital part of NVIDIA’s business, its expansion into these transformative technologies has significantly broadened its economic influence.
NVIDIA’s products find applications in a diverse array of industries, from autonomous vehicles and healthcare to finance and robotics. This widespread adoption means that the company’s performance serves as a proxy for technological adoption and economic activity across many sectors.
In addition to this, NVIDIA’s market capitalization currently hovers around $3.11 trillion as of February 25, 2025, making NVIDIA one of the world’s most valuable companies. Its substantial weighting in major stock market indices like the S&P 500 (6.3% weight) and the Nasdaq-100 means that even relatively small movements in NVIDIA’s stock price can have a ripple effect on overall market performance.
NVIDIA’s Numbers: More Than Just a Quarterly Report
NVIDIA’s earnings reports have become far more than just a measure of the company’s financial health. As a market barometer, the reports are viewed as a crucial indicator of the broader tech sector’s strength and a gauge of the continued momentum of the AI industry.
The company’s upcoming fourth-quarter earnings report, expected after the market closes on February 26, 2025, is particularly significant, with analysts and investors eagerly awaiting the results.
Several key metrics within the earnings report will be scrutinized for their broader implications. A primary focus will be year-over-year revenue growth, especially in the data center and AI segments.
Analysts have projected record quarterly revenue, reflecting the continued demand for NVIDIA’s advanced chips. Earnings per share (EPS) and net income figures will be compared against NVIDIA’s analyst community estimates and the previous year’s performance, providing a measure of profitability and efficiency.
In addition to the raw numbers, NVIDIA’s future guidance will be essential. Forward-looking statements will indicate whether the company anticipates continued growth and strong demand or potential challenges.
Profit margins will also be closely examined as they demonstrate NVIDIA’s pricing power and cost management ability in a competitive market.
Finally, NVIDIA’s overall earnings strength will be interpreted as a reflection of enterprise investment in AI technology. Strong results will suggest that companies across affected sectors are continuing to invest heavily in AI, driving demand for NVIDIA’s chips.
The market’s reaction to the earnings report is likely to be significant, regardless of the outcome. If NVIDIA exceeds expectations with strong earnings and positive guidance, it could trigger a rally in the tech sector and boost overall investor confidence.
Conversely, a miss on earnings or weak guidance could lead to significant market volatility, potential sell-offs, and renewed concerns about the pace of growth in the tech sector. Given NVIDIA’s substantial market capitalization, its stock movements can have an outsized impact on major indices.
Stock Volatility and Institutional Confidence
NVIDIA’s stock performance reflects the broader market’s volatility, particularly within the growth stock segment. While the stock has delivered impressive one-year returns of around 65%, it has experienced significant price swings, as evidenced by its beta of 1.62 (indicating higher volatility than the overall market).
Despite recent dips, increasing interest from hedge funds is seen as a positive sign. Hedge funds have been loading up on AI stocks, including NVIDIA, at the fastest pace since 2021, underscoring institutional confidence in the company’s long-term growth prospects.
The consensus among analysts remains positive, with a Moderate Buy rating and an average price target suggesting a potential upside from the current stock price. However, it is crucial to note that there have been instances of insider selling, with some NVIDIA executives selling shares.
This could be interpreted as a lack of confidence in the near-term performance, but it could also be simple profit-taking. Nevertheless, the prevailing sentiment among investors, especially towards the technology and AI sectors, is closely tied to NVIDIA’s performance. Its stock movements and earnings reactions serve as a psychological barometer for overall market confidence.
Balancing Innovation and Market Expectations
NVIDIA’s emergence as a critical market barometer underscores its pivotal role in the technology sector and the rapidly expanding AI landscape. The company’s performance reflects its financial health and is a broader indicator of investor confidence, technological adoption, and economic activity across multiple industries.
While the upcoming earnings report is a significant near-term catalyst with the potential to sway market sentiment, NVIDIA’s long-term influence extends far beyond any single quarter.
The company’s ability to navigate competitive pressures, geopolitical risks, and macroeconomic uncertainties while continuing to push the boundaries of AI innovation will ultimately determine its continued success and its enduring status as a bellwether for the future of technology.
Investors and market watchers alike will continue to look to NVIDIA, not just for financial returns, but for a glimpse into the trajectory of the next digital revolution.
Palantir Technologies Inc. (NASDAQ: PLTR) stock is officially in a bear market, which is defined as a drop of more than 20% for any length of time. The decline is unsettling for some retail investors who bought the stock during its run-up. However, with the stock filling the gap on the downside, it’s fair to ask what’s driving this decline and how much further it might fall.
Institutional Involvement Is a Double-Edged Sword
Two events significantly drove Palantir’s growth in the second half of 2024. First, the company was included in the S&P 500, and second, it switched its listing to the NASDAQ exchange. Both events forced the hands of institutional investors who had been on the sidelines due to the stock’s high valuation.
However, retail investors are discovering that it’s all fun in games until the big money enters the fray. With large amounts of money invested in the stock, it’s logical that much of the current sell-off in PLTR stock is coming from institutions.
On the surface, they will say that it’s because of Palantir’s high valuation. In the last 12 months, the company has increased its revenue impressively from 12% to 36% and its free cash flow margin from 6% to 55%. However, even with this recent sell-off, the company has a market cap of around $196.65 billion on trailing 12-month revenue of around $2.6 billion. Even for one of the leading technology stocks, that’s tough math.
That’s pricing in a ton of future growth. But let’s be clear. Institutions are also pouncing because they ignored and/or dismissed Palantir when they could have been buying in the $40s or the $20s. So now, the funds have some catching up to do. But they want to do that at a better price.
Efficiency Is Palantir’s Middle Name
As I wrote last week, the PLTR stock slide began, in part, on concerns that the U.S. Department of Defense (DOD) was going to “reallocate” about 8% of its budget. The bears will be quick to note that Palantir generates over 50% of its revenue from the federal government with a massive percentage of that coming from the DOD.
But this doesn’t mean the budget will get cut. As Defense Secretary Pete Hegseth remarked, some programs may get cut to shift that capital to other projects. It’s standard operating procedure with a new administration. And there’s some sentiment that Palantir will benefit from a focus on efficiency. That’s what the company’s products are designed to help its customers do.
That could be why Palantir chief executive officer Alex Karp seems nonplussed by the announcement, recently remarking to the Economic Club of New York, “The single best thing that helps my company is meritocracy, pen test everything…maybe there’s a contract that doesn’t deserve to be renewed, great. Maybe there’s a contract that does deserve renewed that gets canceled.”
That’s very similar to remarks that Karp made on the company’s fourth-quarter earnings call in early February. At the time, Karp said about the impact of DOGE, “We love disruption, and whatever is good for America will be good for Americans—and very good for Palantir.”
That sentiment was echoed by Shyam Sankar, Palantir’s chief technology officer who said that Palantir’s values closely align with DOGE’s mission to bring meritocracy and transparency to government. He also said that it’s a lack of accountability in government, not efficiency that is Palantir’s real competition.
PLTR Stock Is at a Critical Point
Palantir stock is trading near its 50-day simple moving average (SMA). If it slices below that, it’s not unthinkable that it could fall to around $73, which would be near the consensus price of analysts on MarketBeat. It also would be slightly above the stock’s current 100-day SMA.
That said, on February 20, Loop Capital initiated coverage on Palantir stocks with a Buy rating and a price target of $141. PLTR stock is moving into a range that looks oversold.
For long-term investors, this sell-off isn’t enough to spark a panic, and for some on the sidelines, PLTR stock still has much lower to drop. However, the technical signals point to a higher stock price and with the company’s earnings not happening until May, the stock is likely to be volatile along with the broader market.
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