Shares of Nebius Group (NBIS 3.70%) were falling in sympathy with CoreWeave (CRWV 2.71%), its larger neocloud peer, after it issued a disappointing earnings report last night.
While there was no company-specific news out on Nebius, the stocks tend to move in unison as they represent a new and unproven sector in the stock market. Both companies are growing rapidly but are also putting up large losses as they spend aggressively on data centers to sell AI computing power.
As of 2:32 p.m. ET, Nebius was down 14.9%, while CoreWeave was off 21.9%.
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Volatility reigns in the neocloud sector
The AI cloud is a brand-new concept in which companies like Nebius and CoreWeave buy GPUs and rent out the computing capacity to hyperscalers, AI start-ups, and others who need it.
Thus far, it's led to triple-digit revenue growth, but also wide losses as both companies are in the midst of a massive land grab, borrowing billions to build data centers to meet surging demand for AI compute.
Like CoreWeave, Nebius disappointed the market with its own earnings report earlier this month as revenue came up short.
Both stocks have been highly volatile as these businesses are very risky, and investors don't really know how to value them.
NASDAQ: NBIS
Key Data Points
What's next for Nebius
Looking ahead, analysts are expecting Nebius's strong growth to continue, calling for revenue growth of 531% to $3.35 billion in 2026. The company is smaller than CoreWeave, but it's growing faster.
If it can maintain that triple-digit growth, the stock should continue to excite investors, but Nebius will eventually need to make progress on the bottom line for the stock to be a winner.
