Nebius stock price retreated sharply today, October 14, reaching its lowest level since August 11 this year. NBIS dropped to $185.63, down by nearly 40% from the year-to-date high. This retreat has brought its market capitalization to $50.3 billion from the all-time high of $76.3 billion.
Nebius stock drops as Gartner delivers major warning
The ongoing NBIS stock retreat has coincided with that of other companies in the neocloud industry. CoreWeave, the biggest name in the sector, dropped to $65, down by over 52% from the all-time high. IREN, another neocloud company, dropped to $30.9 from the year-to-date high of $70.65.
Other top companies in the neocloud industry like RIOT Platforms, MARA Holdings, and HIVE digital also slumped. The same also happened across other AI firms like Oracle, Nvidia, AMD, and Dell also retreated.
This crash happened after Gartner, a top analytics company, published a report in which it warned about the AI infrastructure industry. Its report warned that over $3.5 trillion of AI infrastructure spending could be exposed to impairment by the end of 2030.
The report noted that AI providers have already spent nearly $1 trillion on AI infrastructure, and that they will spend an additional $6 trillion between 2027 and 2030. Despite this spending, the report notes that AI revenue will not be enough to support profitable returns. As a result, companies could be forced to scale back their investments.
Nebius would be exposed to this impairment
According to Gartner, neocloud companies are among the most exposed to this impairment. It noted that these companies, unlike hyperscalers, don’t have a diversified business model and that they will need to start earning a return.
The view matches what Michael Burry has continued warning in the past few months. In recent statements, Burry warned that these companies will need to depreciate their GPUs at a faster pace than expected. He believes that the useful time of life should be between 2 and 3 years. In contrast, these companies predict that the time should be over 6 years.
The most recent results showed that the company is seeing an increase in depreciation. Its revenue jumped by 454% in the last quarter to $584 million. On the other hand, its depreciation and amortization stood at $259 million, representing 44% of its total revenue. Other neocloud companies are also experiencing this depreciation.
Nebius share price technical analysis
NBIS stock chart | Source: TradingView
The daily chart shows that the NBIS stock has dropped sharply in the past few months, moving from a high of $300 in June to the current $186. It has slipped below the important support level of $187, the Strong, Pivot, Reverse level of the Murrey Math Lines.
The stock has also dropped below the key support level of $194.27, its lowest level on September 2nd. It has also moved below the 50-day moving average and the Supertrend indicator.
Therefore, Nebius will likely continue falling as the fears of the AI bubble bursting continue. If this happens, it may drop to the ultimate support of the Murrey Math Lines tool at $125. Such a move is about 33% below the current level.
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