Nebius Group N.V. (NBIS) | The Buildout — AI Infrastructure
The Verdict
Nebius operates an AI cloud: it builds data centers, fills them with GPU clusters, and rents out that capacity, alongside a software layer for inference and agentic workloads. Its Form 20-F describes it as one of the few at-scale, multi-tenant clouds purpose-built for AI, and that is the whole bet — that a merchant supplier of AI compute can grow alongside the labs and enterprises that cannot build fast enough themselves. The company sells to hyperscalers, AI labs and enterprises, and competes against both the large cloud platforms and the other AI-focused neoclouds.
| Market Cap | — |
| Revenue (TTM) | $1.4B |
| Revenue Growth | +460.9% |
| EBITDA Margin (TTM) | 8.3% |
| Net Debt | $2.0B |
| Earnings Beats | 3 of 5 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Group revenue grew 454% year over year in Q2 2026, with the Nebius AI segment at $575M, up 514% year over year and 98% of the group.
- ARR grew 598% year over year and about 58% quarter over quarter, from $1.9B at end-March, with the quarterly ARR adds accelerating from +$650M to +$1.1B.
- Contracted backlog of $40B, described as largely investment-grade and used as the basis for asset-backed borrowing.
- Customer prepayments are expected to top $9B in 2026; roughly 70% of Q2 deals included a prepayment covering 50–60% of the associated capex.
- The contracted power target was raised twice in two quarters, from more than 3 GW to 5 GW by end-2026, with 800 MW–1 GW connected this year.
What We’re Watching
- Pricing: management says it could sell all of its 2027 capacity today but is holding back. If prices fall, that withheld capacity has no floor.
- Customer concentration: one undisclosed customer was 83% of 2025 revenue.
- Vineland, NJ: the site-layout amendment hearing adjourned without a vote after the project switched its power source to Bloom fuel cells.
- Cash: about $5.7B of Q2 capex against $8B of period-end cash and $2.3B of operating cash flow, with further funding described as relying on asset-backed financing and other options.
The case is strengthening on execution. In the two calls in the source set, revenue, ARR, margins, contracted power and backlog all moved the right way, and management's own account is that named commitments are being delivered. The strain sits on the other side of the ledger: an 83% revenue concentration to one undisclosed customer, a stated reliance on NVIDIA for GPU chips, and a capex program whose incremental funding is not yet fully secured. The open question is whether the pricing environment that justified withholding 2027 capacity holds long enough for the bet to be tested.
Earnings Beat
Group revenue reached $582M in the June 2026 quarter, up 454% year over year and 46% quarter over quarter, at a 77% gross margin. ARR was the standout: $3.0B at end-June, up 598% year over year, as four AI cloud deals averaging more than $1B each closed in the quarter. Management reported group adjusted EBITDA of $236M, a 41% margin.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $582M | $399M | $105M | +454.0% |
| Gross margin | 77.1% | 20.9% | 71.4% | +570bps |
| EBITDA | $84M | $114M | −$36M | −332.8% |
| EPS | $-0.68 | $2.01 | $2.44 | −127.9% |
| Annual recurring revenue (ARR) | $3.0B | $1.9B | n/a | +598% YoY |
we could sell today our entire 2027 capacity on these terms if we wanted to. But we are not doing this. We see that we can achieve higher value by retaining some capacity to serve shorter-term and immediate client needs.— Arkady Volozh, CEO, 2026-08-12
Management tone: The register moved between the two calls, from a plan-execution tone in May to a more confident one in August; management described itself as doing more than reporting a strong quarter behind it, pointing to visible demand, supply and 2027 deal terms. On the August call the team volunteered detail it was not asked for — the auction result, the $20–25M/MW deal mechanics and the lag from connected power to revenue — and answered directly on capacity ramp, financing mix and 2027 unit economics. The two places it leaned on framing rather than specifics were Vineland permitting, which it called part of the normal process and built into the schedule, and the asset-light model, which it called very early stage.
Management Guidance
FY2026 guidance was reaffirmed on the August call: group revenue of $3–3.4B, ARR of $7–9B, an adjusted EBITDA margin of about 40%, and capex of $20–25B. Contracted power was raised to 5 GW by end-2026, while connected power was held at 800 MW–1 GW. Management pre-committed to a margin shape — Q3 back to Q1 levels and higher in Q4 — and expects capacity from its own data centers to begin improving margins in the second half of 2027. Formal 2027 guidance was deferred to later in 2026, with the company pointing to 2027 deals at more than $20M per megawatt, a payback under two years, coming online from late Q4 2026 onward.
Trajectory
Revenue has stepped up every quarter: $105M in the June 2025 quarter, then $146M, $228M, $399M and $582M in the June 2026 quarter, with sequential growth of +90%, +39%, +56%, +75% and +46%. Management attributes the increase to capacity added in the prior quarter, higher utilization, and revenue from the new asset-light model, Token Factory and recent acquisitions. Connected power runs ahead of revenue — management says the step from a commissioned data center to revenue takes a few months — so the 800 MW–1 GW expected online this year points at revenue in 2027. The code-computed revenue signal reads as accelerating even as the year-over-year percentage decelerates off a much larger base.
The Model
The model projects FY+1 revenue of $3,450M with EBITDA of $1,049M — a 30.4% margin — and FY+2 revenue of $9,000M with EBITDA of $3,510M, a 39.0% margin. The near-term figure rests on capacity that is already funded and building: the Microsoft delivery schedule, the four landmark deals coming online later this year, and contracted power rising to 5 GW. The step to FY+2 depends on the Meta committed tranche beginning delivery in early 2027, capacity landing from the owned Alabama and Missouri sites, and the mix shifting toward higher-yield short-term and inference revenue. The five-run spread on FY+2 revenue is wide — $8,750M at the low end, $12,500M at the high.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $534M | $3.5B | $9.0B |
| YoY Growth | — | +545.8% | +160.9% |
| EBITDA | −$231M | $1.0B | $3.5B |
| EBITDA Margin | -43.3% | 30.4% | 39.0% |
Projections are the median of 5 independent model runs.
FY2026 guidance was reaffirmed on the August call: group revenue of $3–3.4B, ARR of $7–9B, an adjusted EBITDA margin of about 40%, and capex of $20–25B. Contracted power was raised to 5 GW by end-2026, while connected power was held at 800 MW–1 GW. Management pre-committed to a margin shape — Q3 back to Q1 levels and higher in Q4 — and expects capacity from its own data centers to begin improving margins in the second half of 2027. Formal 2027 guidance was deferred to later in 2026, with the company pointing to 2027 deals at more than $20M per megawatt, a payback under two years, coming online from late Q4 2026 onward.
What Could Go Right — and Wrong
- Contracted power reaches 5 GW by end-2026 and converts into connected capacity roughly on the schedule management describes.
- The withheld 2027 capacity sells at or above the $20–25M per megawatt midterm baseline; management says its first auction cleared 15% above its highest prior price.
- A second capacity auction clears above the first, with the winning bidder returning for future rounds.
- Meta exercises the $15B option, or Nebius allocates that capacity to its own AI cloud customers at higher prices.
- A first asset-light partner signs with quantified capacity and disclosed economics, turning dozens of inquiries into a second, capital-light growth channel.
- AI cloud pricing inflects down, and the capacity deliberately held back for 2027 has no floor.
- Customer concentration bites: one undisclosed customer was 83% of 2025 revenue, and renegotiation or loss of a top relationship would move revenue.
- The stated reliance on NVIDIA for GPU chips becomes a supply or pricing problem.
- Vineland permitting does not resolve as management expects — the layout-amendment hearing adjourned without a vote.
- The pre-committed 2026 margin shape misses: Q3 back to Q1 levels, then higher in Q4.
Looking Ahead
The next twelve months are about conversion — contracted power into connected capacity, connected capacity into revenue, and signed deals into recognized revenue. Management has pointed to formal 2027 guidance later in 2026, initial Vera Rubin deployments late this year or early next, capacity from the Alabama and Missouri owned sites kicking in during Q1 2027, and the Meta committed tranche starting delivery in early 2027. The nearer tests are the Q3 2026 margin shape and the Vineland layout approval.
- Q3 2026Margin shape test — Management guided Q3 margin back to Q1 levels, then higher in Q4.
- Later in 2026Formal 2027 guidance — Tests whether 2027 lands above the $20–25M/MW baseline.
- Late 2026 / early 2027Vera Rubin deployment — Starts late this year or early next, continuing through 2027.
- Q1 2027Alabama and Missouri capacity — First owned-site capacity begins contributing to revenue.
- Early 2027Meta $12B tranche delivery — Committed dedicated capacity starts delivering to Meta.
- H2 2027Own-data-center margin step-up — Management expects own data centers to begin improving margins.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $105M | $534M | $1.4B | +410.7% |
| Gross Margin | 44.7% | 64.7% | 58.6% | +1,993bps |
| EBITDA | −$266M | −$231M | $113M | +13.0% |
| EBITDA Margin | -253.9% | -43.3% | 8.3% | +21,064bps |
| Net Income | −$651M | $102M | $62M | +115.6% |
| Free Cash Flow | −$720M | −$2.3B | −$5.9B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)58.6%
- EBITDA Margin (TTM)8.3%
- Net Margin (TTM)4.5%
- ROIC-4.3%
- FCF Conversion-5225.4%
- SBC / Revenue13.3%
The Company
Nebius sells AI compute. Its cloud carries GPU clusters in bare-metal and multi-tenant form — GB300 today, moving toward Vera Rubin — plus software for inference and agentic work: the Token Factory inference service, the Tavily search and grounding tool, and inference-optimization teams from Eigen AI and Clarifai. The Nebius AI segment is essentially the whole company at 98% of revenue. The other two businesses, autonomous-driving developer Avride and edtech platform TripleTen, are described as early stage and a drag on group margin, with management intending to find strategic and financial partners for them and deconsolidate.
How it operates: Nebius owns and leases capacity across Europe, the U.S. and other regions — a greenfield site at Mäntsälä in Finland using free cooling and heat recovery, colocation in Paris, Keflavik, London, Israel, Kansas City, Minnesota and Oklahoma, and owned sites in Missouri, Alabama and Pennsylvania. Management says owned contracted capacity is more than 75% of its total power, and the company reported about 170 MW of active power capacity at December 31, 2025. It buys GPU chips from NVIDIA and fuel cells from Bloom Energy, and its engineering stack is its own: in-house-designed infrastructure and an integrated software layer rather than resold third-party racks.
Business Segments
Competitive Landscape
The 20-F names the competition directly: hyperscalers scaling AI (Amazon's AWS, Google Cloud, Microsoft Azure, Oracle), AI-focused neoclouds (CoreWeave, Crusoe, Lambda Labs), inference-as-a-service providers against Token Factory (Fireworks AI, Together AI), and Waymo and Zoox against Avride. Management's framing on the August call was that demand outruns supply — it said it sold out capacity again because it can sell capacity as fast as it comes online — and that new entrants selling compute at a premium validate rather than threaten the market.
- Microsoft (Azure)Named in the 20-F set of hyperscalers scaling AI; also a customer under a commercial agreement valued at up to about $17.4B through 2031.
- Amazon (AWS)Named in the 20-F set of hyperscalers scaling AI.
- CoreWeaveNamed as an AI-centric neocloud in the 20-F competitive set, alongside Crusoe and Lambda Labs.
- Fireworks AINamed as an inference-as-a-service competitor to the Token Factory product, alongside Together AI.
- WaymoNamed in the 20-F as a competitor to Avride, alongside Zoox.
Supply Chain
Nebius buys GPU chips from NVIDIA and fuel cells from Bloom Energy, and sells AI cloud capacity to hyperscalers, AI labs and enterprises. NVIDIA and Bloom both name Nebius directly on their own calls, which most other supply-chain neighbors do not.
More on NBIS: Earnings recap