Nebius Group N.V. (NBIS) is demonstrating remarkable progress, with its stock surging by over 120%, now representing a significant portion of my portfolio. This substantial growth underscores the company's strong market position and promising future in the cloud computing and artificial intelligence sectors.
A core element of this positive outlook is the rapid acceleration of Nebius's Annual Recurring Revenue (ARR), which is projected to reach between $900 million and $1.1 billion. This robust financial trajectory is further reinforced by CEO Arkady Volozh's anticipation of achieving positive adjusted EBITDA for the entire group by 2026, signaling a commitment to sustainable profitability. The company's strategic expansion of its data center capacity is also a critical factor, with 220MW contracted by the end of the year, approximately 100MW of which are already operational. Looking ahead, Nebius aims to reach an impressive 1GW capacity next year, solidifying its infrastructure for future growth.
While a temporary slowdown in Q3 ARR growth is anticipated as clients await the release of Nvidia's GB300, the company expects a significant surge in GPU installations and associated revenue during the fourth quarter. This phased growth reflects the dynamic nature of the AI hardware market and Nebius's adaptive strategy to capitalize on new technology cycles. Compared to its peers, such as CoreWeave, Nebius stands out as a pure-play option for investors, offering a compelling combination of lower debt and an early emphasis on achieving and maintaining profitability. Despite CoreWeave's larger current capacity of 2.2GW, Nebius's prudent financial management and strategic focus on long-term sustainability make it a highly attractive investment.
The current financial landscape for Nebius Group is exceedingly positive, marked by significant stock appreciation and a clear path toward enhanced profitability. The strategic vision, combined with ongoing capacity expansion and a keen awareness of market dynamics, positions Nebius for continued success in the evolving cloud and AI markets.