Nebius shares rose 11% following a price increase for AI chips. What might this indicate?

Shares of Nebius Group, owned by billionaire Arkady Volozh and providing cloud infrastructure for artificial intelligence, rose more than 11% at the opening bell on September 17, although the momentum slowed sharply afterward. The surge came after reports on social media that the company had raised prices for a number of its computing services, as noted by Seeking Alpha.

Starting October 1, Nebius will raise its rates for renting computing power based on Nvidia graphics processing units (GPUs): the changes will affect the H100, H200, B200, and B300 chips. Information about the price list update was initially shared by users on Reddit and X, and later reported by Stocktwits, according to Seeking Alpha. The cost of renting several Nvidia GPUs will increase by approximately 20%, according to a post on X by Shay Bolor, chief market strategist at Futurum Equities.

The price increase will also affect the rental of standard servers without graphics cards (based on standard processors—CPUs). According to Stocktwits, the hourly rate for an AMD EPYC Genoa processor will increase by 25%—from 1.2 to 1.5 cents. And the cost per gigabyte of RAM for these servers will increase by 41%—from 0.32 to 0.45 cents per hour.

Nebius did not respond to Seeking Alpha's request for comment.

The trend in pricing indicates strong demand for affordable AI computing power, according to Barron’s: specifically, in July, CoreWeave also raised prices for a number of chips by approximately 25%. However, investors should keep in mind that this growth will not be fully reflected in the companies’ future financial statements. A significant portion of their revenue is secured through long-term contracts with individual pricing terms, according to Barron’s.

“Demand for AI remains sky-high. Nebius’s 20% price increase is just further proof of that,” wrote Daniel Newman, CEO of Futurum Group, on X.

It is telling that Nebius’s rate hike affects the rental of Nvidia H100 chips—hardware that was released back in 2022, Barron’s noted. The main argument of skeptics regarding non-cloud companies, including investor Michael Burry, was that cloud providers artificially inflate the long-term cost of Nvidia equipment by using a six-year depreciation schedule. According to their estimates, spreading the cost of an asset over such a long assumed useful life means that companies are systematically understating their annual expenses, Barron’s adds.

However, the fact that Nebius is raising prices on chips that are four years old suggests that such concerns, at least for now, are unfounded, Barron’s concludes.

From the beginning of the year until the market opened on September 17, Nebius shares had risen by more than 150%, although they have fallen by 27% over the past three months.

The current analyst consensus on Nebius stock is “Overweight,” based on estimates from 21 experts, according to MarketWatch. The overwhelming majority are positive: 13 analysts recommend buying (12 “Buy” and one “Overweight”), seven advise holding the stock (“Hold”), and only one recommends selling (“Underweight”). The average price target of $296 implies a 41% increase from the stock’s closing price on September 16.

This article was AI-translated and verified by a human editor