Nebius Slumps 17% on Weak Outlook as Burry Warns of Chip Glut

Key points

• Nebius stock dropped 17.5% to under $128 after lowering full-year revenue guidance to the low end of its $3 billion to $3.4 billion range.
• The company reported Q3 revenue of $980.8 million, a 571% increase year-over-year, but posted a net loss of $37.5 million.
• Computing capacity originally expected for late 2026 is now delayed to the first half of 2027, impacting revenue projections.
• Michael Burry, who shorted Nebius, argues a 'chip glut' is imminent as Chinese production capacity expands, contradicting current shortage narratives.
• Nebius raised $5.75 billion in debt financing during the quarter, with CEO Arkady Volozh stating that AI demand remains real despite financing concerns.
• The sector faced volatility after Nvidia CEO Jensen Huang resigned amid allegations of extramarital affairs and espionage, causing Nvidia shares to fall 35% from their peak.

Background

Recent archive coverage highlights Michael Burry’s growing bearish stance on AI infrastructure, warning that massive capital expenditures lack economic endpoints and risk becoming sunk costs. Earlier reports noted that Burry viewed Nvidia’s recent decline as a trading opportunity and urged investors to exit positions following Jensen Huang’s resignation, citing disrupted financing structures. Additionally, prior analysis suggested that rising interest rates and stress in private credit markets were creating unsustainable financing conditions for AI data centers, a theme echoed in Nebius’s current debt financing activities.

How outlets are covering it

CNBC emphasizes that Nebius’s results surpassed consensus, with revenue beating expectations, and notes that the stock’s drop followed a broader sector rally where CoreWeave and IREN posted strong gains. CNBC frames the guidance cut as a conservative approach to buildout pace, with CEO Arkady Volozh asserting that AI demand is substantial and financing challenges are solvable tasks. In contrast, Yahoo Finance focuses on Michael Burry’s vindication, highlighting his short position and his warning of a 'chip glut' driven by Chinese overcapacity. Yahoo Finance cites Acer CEO Jason Chen, who denies memory shortages, to support Burry’s thesis that production will soon outstrip demand. While CNBC highlights the resilience of neocloud peers, Yahoo Finance frames the event as a signal of a broader AI bubble burst, citing similar warnings from Jeremy Grantham and Jeffrey Gundlach.

Why it matters

The decline in Nebius signals potential cracks in the AI infrastructure buildout, where massive capital expenditures may not yield immediate returns. If Burry’s prediction of a chip glut materializes, it could disrupt the supply chain for AI companies reliant on scarce hardware. The sector’s volatility, exacerbated by leadership changes at Nvidia and rising debt financing, suggests that investors may face significant drawdowns if demand does not sustain the current pace of infrastructure investment.

What to watch

Investors will monitor Nebius’s ability to execute its $27 billion capital expenditure plan for 2026 and its $40 billion to $45 billion plan for 2027. The market will watch for signs of a chip glut as Chinese production capacity expands, potentially easing current shortages. Additionally, the sector’s trajectory will depend on whether AI demand can sustain the high levels of debt financing, with CoreWeave and other neoclouds facing similar scrutiny over their capital structures.