"Not a 'meme stock'": Why does an analyst believe Nebius shares are overvalued by more than 50%?

Shares of Nebius, the Dutch cloud-based AI provider founded by Arkady Volozh, have risen 135% since the start of the year, and over the past 12 months, the company’s market capitalization has soared 320% to approximately $55 billion. Such figures place Nebius on par with CoreWeave—a leader in providing full-cycle infrastructure for AI developers— as noted by MorningStar. However, the research firm has identified signs of a significant overvaluation of Nebius shares: according to MorningStar, current prices are significantly overvalued. In trading on June 16, Nebius shares are up about 3%.

MorningStar’s analysis shows that Nebius shares appear very expensive and are trading at a significant premium to their fair value, as determined by the research firm. And although Javier Correonero of MorningStar recently raised his fair value estimate for Nebius shares from $85 to $120 per share, at current prices Nebius remains a “one-star” stock, the publication notes. This means the stock is critically overvalued, which deprives investors of profit potential and poses a risk of capital loss. The MorningStar analyst’s new valuation implies a 53.8% decline in the company’s stock price relative to its most recent closing price.

“Nebius isn’t just a meme stock—it’s a serious data center operator with a strong and knowledgeable management team. But it is a stock with a high beta (beta indicates how much a stock’s price fluctuates relative to the overall market. — OnInvest),” says Correonero.

Nebius, which, according to Correonero, lacks sustainable competitive advantages, has outlined aggressive spending plans to expand its data center network and fulfill its contracts. The analyst predicts that the company’s capital expenditures in 2026 could range from $20 billion to $25 billion.

“I have no doubt that Nebius’s revenue will grow significantly. The key question is profitability,” says Correonero. According to him, MorningStar believes in the long-term viability of Volozh’s company and “expects that, in the long run, it will achieve an adjusted EBIT margin of around 20%.” “However, their cost of capital is high, and in the coming years, Nebius will need to raise billions of dollars in equity capital, which will dilute shareholders’ stakes,” the analyst noted.

Nebius designs and manages its own network of data centers and servers in Europe and the United States. The company owns facilities in the United Kingdom, Finland, Iceland, and New Jersey, with a total capacity of several hundred megawatts, and plans to launch new facilities in Spain, Pennsylvania, Alabama, and other regions.

Unlike other cloud gaming providers, such as CoreWeave, Nebius owns—rather than leases—the majority (about 75%) of its data center infrastructure, which gives the company a higher level of control over its computing power, according to MorningStar.

In September 2025, Microsoft became one of the company’s major clients, signing a multi-year agreement with Nebius to provide graphics processing unit (GPU) infrastructure capacity. In March, the Dutch provider signed an AI computing agreement with Meta Platforms worth up to $27 billion and also received an additional $2 billion in direct equity investment from Nvidia.

10 out of 17 analysts covering Nebius stock recommend buying it. Six are neutral, and only one advises selling. Wall Street’s average price target of $255 implies a 1.9% decline in the company’s stock price relative to the latest closing price.

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