Nebius (NBIS) Stock Slides Despite Vineland Data Center Expansion Green Light

Key Takeaways

Table of Contents

Vineland’s Planning Board greenlit Phase 2 expansion of Nebius’ data center in New Jersey, incorporating an additional 600,000 square feet.
This regulatory clearance removes a critical obstacle to Nebius’ five-year, $17.4 billion Microsoft cloud agreement.
NBIS shares fell 2% during premarket hours on Tuesday, trading at approximately $277.58.
Second-quarter revenue reached $582.3 million, representing a 454% year-over-year surge and significantly exceeding analyst projections.
Bank of America maintains a Buy recommendation on NBIS with a $310 price objective.

Shares of Nebius Group (NBIS) declined 2% in Tuesday’s premarket session, trading around $277.58, despite the company clearing a significant regulatory milestone essential to its largest cloud infrastructure agreement.

Nebius Group N.V., NBIS

On Monday evening, Vineland, New Jersey’s Planning Board granted approval for Phase 2 of the artificial intelligence data center currently being built in the southern New Jersey municipality. This expansion adds 600,000 square feet to the facility, which initially received approval as approximately a 300-megawatt operation. Construction on Phase 1 is already in progress.

DataOne is developing the site as a significant AI infrastructure hub. The initiative faced delays after DataOne suggested a more extensive development that could extend to 350 MW. Community concerns regarding noise pollution, water consumption, emissions output, and liquefied natural gas storage postponed the board’s decision.

This regulatory approval carries substantial weight because the Vineland location is anticipated to supply the infrastructure supporting Nebius’ $17.4 billion agreement with Microsoft. The two corporations finalized a five-year arrangement last year, positioning the New Jersey facility as a cornerstone of Nebius‘ United States growth strategy.

Absent this approval, Nebius faced potential setbacks in deploying capacity for Microsoft according to agreed timelines. This uncertainty has now been eliminated.

The premarket decline occurred amid wider market volatility connected to escalating attacks in the Strait of Hormuz, unrelated to any Nebius-specific developments. Nevertheless, NBIS ranked among the most actively discussed stocks on Stocktwits during Tuesday morning hours.

Impressive Financial Performance

The Vineland development follows Nebius’ exceptional Q2 financial report released days earlier. The company recorded revenue of $582.3 million, marking a 454% year-over-year increase, while posting an EPS loss of just -$0.12 compared to the consensus estimate of -$0.67. The AI Cloud division alone expanded by 514%.

The annualized revenue run rate is nearing $3 billion. Adjusted EBITDA totaled $236 million during the quarter. Four AI infrastructure agreements now reportedly surpass $1 billion in aggregate value, with the overall backlog exceeding $40 billion.

These figures propelled NBIS shares up 34% on the earnings release date.

After the quarterly results, Citigroup elevated its price target to $324, Robert W. Baird increased theirs to $340 with an outperform designation, and Bank of America boosted its target to $310 while reaffirming a Buy rating.

Wall Street and Institutional Perspectives

Bank of America analysts observed that both Nebius and CoreWeave (CRWV) are capitalizing on “progressively advantageous pricing conditions,” as hyperscaler and AI laboratory demand continues outstripping GPU availability.

BofA indicated that pricing for next-generation GPU units is climbing higher, while previous-generation GPU pricing remains stable. The firm’s analysts believe these market dynamics could elevate operating margins by 500 to 1,000 basis points.

Nebius intends to roll out over 1 gigawatt of capacity annually beginning in 2027 and maintains a contracted power objective of 5 gigawatts.

Alberta Investment Management Corp. revealed a newly acquired position of 55,800 NBIS stock units, worth approximately $15.4 million, accumulated during the second quarter. Institutional investors and hedge funds collectively hold 21.9% of outstanding shares.

Not all analysts share the optimistic outlook. Morgan Stanley assigns an equal-weight rating with a $144 price target. DA Davidson rates the stock neutral with a $175 objective. Michael Burry has reportedly established a short position.

Piper Sandler launched coverage on August 3 with a neutral rating and a $224 price target.

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