"We've always been fans of the company": Freedom recommended buying Nebius stock

Freedom Capital Markets has upgraded its rating on shares of Arkady Volozh’s cloud provider Nebius from a “hold” to a “buy,” according to a note obtained by Oninvest.

The drop of more than 40% from the peak reached on June 22 has created an attractive entry point, according to a team of analysts led by Paul Mix. “The stock price may finally be fair. Fundamentally, we’ve always been fans of the company,” they wrote. The analysts raised their price target for Nebius shares from $159 to $200, implying 12% upside potential relative to the July 17 closing price.

During trading on July 20, the company's shares rose 9%, but then saw their gains narrow significantly. Since the beginning of the year, their value has increased by nearly 120%.

Analysts warned that Nebius shares are trending downward and are trading 30% below Wall Street’s consensus estimate, which Freedom also described as overblown. According to Mix, this trend will continue until there is confidence that the company can deliver a significant increase in capacity capable of meeting its revenue expectations. To do so, “flawless execution will be required,” the note states.

Like other neo-cloud companies, Nebius is expected to show “explosive revenue growth” from 2025 to 2028, according to Freedom’s forecast. According to its estimates, the figure will surge 41-fold, but it is premature to factor all of this potential into the stock price. Nevertheless, analysts acknowledged that multiples could rise over time.

That said, now that the stock price has fallen to a level reflecting Freedom’s “conservative” valuation, the risks are already largely priced in. "We are finally ready to recommend buying [Nebius] shares, as our long-term positive outlook on the company has not changed," Mix explained.

In addition, Nebius saw a positive catalyst last week that may have gone unnoticed by the market, according to Freedom. The company secured its first secured loan of approximately $775 million to accelerate the rollout of its cloud-based AI platform. The loan is secured by GPU chips and cash flows from an unnamed hyperscale customer. Analysts note that the two largest such customers are Microsoft and Meta.

In its first-quarter results, Nebius reported a 684% year-over-year increase in revenue, reaching $399 million. In 2026, the company forecasts revenue of between $3 billion and $3.4 billion, and estimates that its annual recurring revenue (ARR) will range from $7 billion to $9 billion.

Nebius leases computing power for artificial intelligence. The company has signed a five-year agreement with Microsoft worth $17.4 billion, with the option to increase the amount to $19.4 billion, as well as a contract with Meta to provide infrastructure worth up to $27 billion.

Although Nebius's market capitalization has already more than doubled this year, nearly 60% of the analysts covering the company still recommend buying its stock, according to MarketWatch.

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