Artificial intelligence (AI) stocks have been in sell-off mode lately, with software stocks taking a beating in recent sessions as investors worry about potential business disruptions this technology could create.
The heavy spending on AI data centers continues to be a cause for concern for investors. This isn't the first time that AI-focused companies experienced a sell-off. However, AI stocks have delivered healthy gains to investors over the past three years despite bouts of volatility, as evidenced by the 109% gains registered by the Global X Artificial Intelligence and Technology ETF during this period.
It won't be surprising to see AI stocks bounce back, thanks to the long-term productivity gains the technology can deliver. That's why it would be a good idea to buy Nebius Group (NBIS 3.70%) stock while it remains beaten down. Let's look at the reasons why Nebius could be the best AI stock to consider in February.
Image source: Getty Images.
Nebius' business model sets it up for long-term success
Nebius is a neocloud company that provides AI hardware and software solutions to customers through dedicated data centers powered by accelerators from Nvidia, AMD, and others. Nebius rents out its computing capacity to customers for a fee so they can run AI workloads in the cloud. It also offers other solutions, such as AI inference applications, image generation, model training, and the creation of custom AI applications, through its managed software services.
NASDAQ: NBIS
Key Data Points
Nebius customers don't need to invest in expensive hardware and can get access to popular large language models (LLMs) on its platform. This explains why its business model has been a hit. The demand for the company's AI infrastructure is exceeding supply, driven by the huge contracts it negotiated with hyperscalers such as Meta Platforms and Microsoft (MSFT 0.73%).
These two companies awarded Nebius contracts totaling more than $20 billion over the next five years. That's a big figure, considering that Nebius is estimated to have generated $550 million in revenue in 2025, up 368% from the prior year. Microsoft alone awarded a contract worth $17.4 billion to $19.4 billion to Nebius for purchasing the latter's data center capacity.
This contract runs through 2031, suggesting it could move the needle in a bigger way for Nebius. Investors will do well to note that Microsoft was sitting on a massive revenue backlog at the end of the previous quarter. Its commercial remaining performance obligations (RPO) stood at a whopping $625 billion in the second quarter of fiscal 2026.
So, don't be surprised if Microsoft taps Nebius for additional AI computing capacity, potentially setting the latter up for stronger growth in 2026.
Stronger-than-expected growth could be in the cards this year
Nebius will release its fourth-quarter 2025 results on Feb. 12. We have already seen that the company has a large enough revenue pipeline to enable it to post a solid outlook.
Not surprisingly, analysts expect Nebius' revenue to rise more than 6x this year to almost $3.5 billion.
Nebius stock trades at an expensive 57 times sales right now, but its growth is impressive enough to justify that valuation. Moreover, the healthy demand for AI infrastructure and Nebius' pipeline suggest it won't lose momentum anytime soon, which is why it would be a good idea to buy before it pops in February following its quarterly report.
