AI cloud provider Nebius sinks 9% on disappointing guidance, despite 3Q revenue beat

Shares of Nebius, an AI cloud infrastructure provider founded by Yandex cofounder Arkady Volozh, sank 9% in U.S. premarket trading on Thursday after the company reported third-quarter results.

Nebius pointed to growing demand for cloud infrastructure, and the management expects revenue of $12-13 billion in 2027. “Demand remains exceptionally strong, and we have the right mechanisms in place to capture it,” Volozh said in a letter to shareholders.

For 2026, however, the management now expects revenue at the low end of its existing $3.0-3.4 billion guidance range, Reuters reports. That puts the outlook below the LSEG consensus estimate of $3.37 billion. Volozh said some revenue expected in 2026 would shift into early 2027. The management now expects annual run-rate revenue to exceed $7 billion in February, about two months later than originally planned.

Investors sold off the stock even as Nebius reported a 571% year-over-year jump in third-quarter revenue to $980.8 million, beating analysts’ estimate of $907 million. The net loss also came in narrower than expected, at $0.13 per share versus the $0.72 analysts had forecast. A year earlier, Nebius posted a net loss of $0.50 per share.

Nebius also said customers signed longer contracts at higher prices in the third quarter and paid more upfront. Those prepayments covered more than 100% of the capex associated with the agreements, including data center construction and networking. The management expects Nebius to break even on a pretax basis by the end of 2027.

Nebius reported on Thursday morning U.S. time, two days after its main rival, neocloud CoreWeave, beat analysts’ revenue expectations. CoreWeave’s management raised its full-year revenue guidance to $13.0-13.3 billion.

CoreWeave jumped almost 25% on Wednesday after the strong results, lifting the broader sector. Shares of data center operators and makers of storage systems, memory, chipmaking equipment, and servers rose. Nebius gained more than 15%.

Still, Nebius shares have retreated 34% since the start of October amid a selloff in neocloud stocks. Investors have grown concerned about rising debt at neoclouds, especially CoreWeave, as the companies borrow heavily to build AI data centers faster. A measure of CoreWeave’s credit risk hit a record last month amid a rout in its high-yield bonds.

High borrowing costs pushed CoreWeave’s interest expense above its operating profit last quarter. The management signaled it would shift from high-yield unsecured bonds to delayed-draw loans backed by customer contracts.

Nebius generates considerably less revenue than CoreWeave and takes a more conservative approach to borrowing. A few weeks ago, Nebius secured a $3.5 billion credit facility from Citi. It has about $10 billion in outstanding convertible bonds, Barron’s notes.