Hey Income Traders,

Nebius grew revenue 571% last quarter, beat on earnings, and still lost about 16% the day it reported.

I’ll get to why, because it tells you a lot about what this market will pay for right now.

First, a garbage company I’d happily own for the next ten years.

Both names are also on my list for Monday’s Ticker Highlight Show pick.

The Truck Always Shows Up

Let me start with the one I just like living with Waste Management (WM).

In a market where everybody’s trying to handicap which AI model wins, which chip wins, which data center actually gets powered on, here’s a company whose whole business is that the garbage truck comes every week. Trash never goes out of style, and nobody’s disrupting it. There’s no Chinese open-source model that hauls your landfill for a tenth of the price.

This is the boring compounder. It holds up in recessions. It pushes through price increases year after year, and collection and disposal yield rose 3.4% last quarter. And it owns landfills in a country where nobody can get a new one permitted anymore.

Better yet, it throws off real cash that keeps growing. Free cash flow through the first nine months of 2026 hit $3.01 billion, up 42% from a year ago. WM handed $957 million back to shareholders last quarter alone. Now that money’s gotten picky, this market has started rewarding exactly that again. When the flashy stuff gets questioned, you want something that keeps turning the handle. WM turns the handle. One to love.

Who’s Paying for All This?

Now Nebius (NBIS). I want to be fair, because the report was good. Revenue jumped 571% to $981 million. Adjusted EBITDA margin climbed to 47.5% from 41% the quarter before. Management said flat out that demand has never been stronger, and new contracts are pricing higher than they did a quarter ago. On paper, that’s a dream.

So why leave it? Because keeping up with that demand costs a fortune. Nebius raised its 2026 capex to about $27 billion, then guided 2027 to $40 to $45 billion. The Street had penciled in roughly $29 billion. That’s a company doing about a billion a quarter in revenue telling you it’ll spend forty-plus billion next year to keep up.

When a builder says it can’t keep up with demand, the spending comes first and the revenue shows up later. Prepayments, converts and debt fill the gap in between. Nebius carried $8.5 billion of debt at the end of June, then sold another $5.75 billion in convertible notes in August. Customer prepayments did cover all the new capex tied to deals it signed in Q3, and management expects prepayments plus contract-backed loans to fund 75% to 85% of the 2027 budget. That still leaves somewhere between $6 billion and $11 billion to raise elsewhere. And the whole plan leans on those contracts holding and the capacity arriving on time.

The timing already slipped. Nebius now expects 2026 revenue at the low end of its $3 billion to $3.4 billion range, and it pushed its $7 billion run-rate target from year-end to February. Management calls it timing, not demand. The stock got hammered anyway, because the market finally asked the APLD question: who’s funding all this, and what happens if one big contract wobbles?

We flagged the same thing on Applied Digital. Nebius just has faster growth on top. It’s a leveraged builder spending billions ahead of the cash, right into rates that are still sticky. I love the theme. I don’t want to own the balance sheet that’s trying to outrun it. One to leave.

Monday at 10:30

Every Option Pit trader brings two candidates to the table each week, and Monday morning we narrow them down to one trade.

These are my two.

I’m not telling you yet which way I’d play either one, or whether either survives the cut.

You’ll find out live on Ticker Highlight Show, Monday, November 16th at 10:30 AM.

Here for a good time… AND a long time,

Hans