Nebius stock rallies on Missouri deal, yet chart signals looming reversal

Nebius stock price surged by 12% on Wednesday as top neocloud companies soared, and after a major development in Missouri.

NBIS jumped to $97, up substantially from this week's low of $83.

However, technical analysis suggests these gains could be limited as it has formed the risky head-and-shoulders pattern.

Nebius stock jumped after a major update 

The NBIS stock price rebound coincided with that of other similar companies.

CoreWeave, the biggest name in the industry, jumped by 7.75%, while IREN jumped by 12%.

Similarly, Bitfarms and Terawulf stocks soared by over 10%.

The rally is a sign that investors believe that the industry is doing well amid the ongoing data center spending.

The top hyperscalers like Microsoft, Google, and Amazon have pledged to spend over $650 billion this year. 

In total, data center spending is expected to top $2 trillion. Some of these funds will go to neocloud companies, including Nebius.

Nebius stock jumped after the company secured its first gigawatt-scale AI factory in Missouri.

This approval will make it possible for it to construct a factory with a capacity of 1.2 GW. 

In its statement, the company said that its 400-acre project will create 1,200 jobs during the construction process. It will then add 150 permanent jobs when the plant is fully operational.

Nebius’ business is doing well, with its data center business attracting top clients like Microsoft and Meta Platforms.

Its deal with Microsoft is valued at over $20 billion, while its Meta partnership is worth close to $15 billion. 

Nebius’s business is doing well. Its annual revenue jumped by 479% to over $529 million.

Its annualized run-rate revenue jumped to $1.2 billion, with demand exceeding capacity.

The challenge, however, is that its costs are also rising. Its total operating costs and expenses jumped to $1.12 billion.

Wall Street analysts believe that Nebius’s business will continue its growth this year.

The average revenue estimate for the current quarter is $360 million, up by 552% on an annualized basis.

It is then expected to make $552 million, up by 425%, while the annual figure will jump by 530% to over $3.3 billion. Additionally, analysts believe that its revenue will jump to $9.42 billion. 

Still, a major challenge that Nebius faces is that its short interest has continued rising this year.

Over 38 million NBIS shares have been shorted, giving it a short interest of 19%. That is a sign that many investors anticipate the stock to drop further.

Nebius share price also faces the challenge of the rising competition in the neocloud industry.

In addition to CoreWeave, most Bitcoin mining companies like Riot, IREN, Bitfarms, and Core Scientific have entered the industry.

NBIS stock price technical analysis

The daily chart shows that the Nebius share price has slowly formed a head-and-shoulders pattern, a common bearish reversal sign in technical analysis.

Its head is at $111, while its shoulders are at $104. Also, the neckline is at $77.

The stock is also consolidating at the 50-day and 100-day Exponential Moving Averages (EMA).

It also remains slightly above the 38.2% Fibonacci Retracement level.

Therefore, the stock will likely have a big reversal in the near term. If this happens, the next key target to watch will be at the head-and-shoulders neckline at $76.

A move below that price will point to more downside, potentially to the 61.8% Fibonacci Retracement level at $65. 

The bearish outlook will become invalid if it rises above the key resistance level at $110, its highest swing in January this year.