2 AI Stocks With Record Breaking Rallies: Can They Continue?

Amidst a broad market rally and the S&P 500 hitting new highs post-Federal Reserve rate cut, the AI infrastructure sector is experiencing significant momentum. Nebius Group (NBIS) exemplifies this trend, having secured a $17.4 billion deal with Microsoft, which propelled its shares over 120% in three months, establishing it as a major provider despite potential revenue concentration risk. Similarly, Hut 8 Corp (HUT) successfully pivoted from Bitcoin mining to AI infrastructure, reporting strong Q2 2025 results and new contracts, driving its stock up over 60%, though technical indicators suggest it may be overextended.

Analysis

In a risk-on market environment, characterized by the S&P 500 reaching new highs following a Federal Reserve rate cut, the artificial intelligence infrastructure sector has demonstrated significant momentum. Nebius Group (NBIS) has emerged as a key beneficiary, securing a company-altering $17.4 billion contract with Microsoft that exceeded its market capitalization at the time of the announcement. This deal, coupled with a Q2 2025 earnings beat and raised full-year ARR guidance to a range of $900 million to $1.1 billion, has propelled the stock over 120% in the last three months and solidified its position as a major AI infrastructure provider. However, this creates a significant risk due to high revenue concentration on a single customer agreement. Concurrently, Hut 8 Corp. (HUT) has successfully pivoted from its origins as a Bitcoin miner to a diversified digital infrastructure firm. The company reported a 17% year-over-year revenue increase to $41.3 million in Q2 2025, secured a five-year energy contract, and received four analyst price target upgrades. Despite this fundamental progress, which has driven the stock up over 60% in the last month, technical indicators such as the Relative Strength Index (RSI) are approaching overbought territory, signaling the potential for a near-term pullback.

Key Decisions for Investors

• For Nebius Group, the transformative Microsoft deal provides strong fundamental validation, but the stock's rapid 120% appreciation and significant customer concentration risk suggest that pullbacks toward its 50-day simple moving average may present more prudent entry points.
• While Hut 8's strategic pivot to AI infrastructure is compelling, its stock is technically overextended with an RSI nearing overbought levels, making it advisable to wait for a price consolidation or pullback before initiating new long positions.
• Investors should note that both NBIS and HUT are trading considerably above their stated average analyst price targets, indicating that the recent positive news may be largely priced in and increasing vulnerability to any sector-wide or market correction.