Nebius, IREN rally as dip buyers return to AI infrastructure stocks

Investing.com -- Nebius and IREN shares rallied Monday as investors stepped back into battered AI infrastructure stocks, with a Goldman Sachs upgrade of CoreWeave helping bolster sentiment across the sector after last week’s steep selloff.

Nebius Group (NASDAQ: NBIS) rose 7% in premarket trading, while IREN (NASDAQ: IREN) gained 6%. CoreWeave (NASDAQ: CRWV) climbed 6.3% after Goldman Sachs upgraded the stock to Buy from Neutral, arguing that investors may be overestimating financing risks and underestimating the returns from AI computing investments.

The rebound suggests dip buyers are returning to a trade that came under intense pressure last week as rising interest-rate expectations, credit-market volatility and questions about the economics of the AI infrastructure buildout rattled investors. The selloff hit companies that must commit enormous sums to data centers, power capacity and advanced chips before realizing returns on those investments.

Goldman’s call offers a fresh counterargument to the bearish narrative. Analyst Gabriela Borges lowered her CoreWeave price target to $106 from $139 but maintained that the stock offered 73% upside from recent levels. The bank expects tight computing supply and CoreWeave’s execution capabilities to support improving returns, while arguing that increases in its financing costs should remain manageable.

The implications extend beyond CoreWeave. Nebius and IREN are also competing to capitalize on growing demand for AI computing capacity, making investor confidence in the durability of AI spending and the economics of infrastructure investments central to their valuations.

Still, the rally does not resolve the sector’s underlying risks. Higher borrowing costs could pressure returns, while an eventual increase in computing supply could weaken pricing power. Investors must also determine whether customers can generate enough revenue from AI workloads to justify the industry’s enormous capital commitments.

For now, Wall Street’s renewed willingness to back CoreWeave is helping stabilize sentiment across the group. After last week’s rout, Monday’s gains suggest some investors see the selloff as an opportunity to buy AI infrastructure stocks rather than a signal to abandon the trade.

Original Article

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