Shares of artificial intelligence (AI)-optimized cloud infrastructure provider Nebius Group (NBIS +1.40%) have gained over 269% so far in 2025. The company is growing at a dramatic pace, driven by multibillion-dollar capacity contracts with multiple technology giants, presold data center capacity, and a focused software optimization strategy.
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Although the data center capacity is currently constrained, Nebius' aggressive expansion plans can make it a significant beneficiary of the ongoing AI boom by 2030.
Data center capacity
In the third quarter of fiscal 2025 (ending Sept. 30), Nebius' revenues were up 355% year over year to $146 million. The company's core data center infrastructure business grew 400% year over year, accounting for nearly 90% of total revenues. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin of this infrastructure business was 19%.
NASDAQ: NBIS
Key Data Points
With demand far outpacing supply, Nebius sold out all available core GPU compute capacity. The company also reported a 70% quarter-over-quarter jump in pipeline deal value to $4 billion. However, the company is only able to translate a portion of this pipeline to revenues due to constrained capacity.
Nebius is focused on resolving this challenge. The company aims to achieve 2.5 gigawatts of contracted power and 800 megawatts to 1 gigawatt of connected power (active power and power that can be activated immediately after GPU installations in data centers) by the end of 2026.
Nebius is also seeing strong demand in international markets and has already sold capacity in new data centers in Israel and the United Kingdom. The demand for cloud infrastructure based on both Nvidia's Hopper GPUs and Blackwell GPUs is robust. Clients are also interested in purchasing Blackwell-based data center capacity in advance and then securing it over a more extended time frame. Subsequently, the company has also presold a major part of its 2026 capacity.
Partnerships
Nebius has entered into a multibillion-dollar partnership with Microsoft to supply capacity from its Vineland data center, starting late 2025. While the deal is currently valued at $17.4 billion, the contract value could increase to $19.4 billion if Microsoft purchases additional services capacity from Nebius. The company has also signed a $3 billion, five-year capacity supply deal with Meta Platforms and expects to complete deployments by the end of 2025.
These partnerships have dramatically improved Nebius' future revenue visibility and positioned the company as a key player in the AI infrastructure space.
Software stack
Going beyond compute capacity, Nebius is also working to position itself as a full-stack AI cloud provider. The company has launched its third version of the AI cloud platform called Aether. It enables enterprises to run critical AI workloads while meeting security, compliance, and observability standards.
The company has also launched a production-scale inference-as-a-service platform called Nebius Token Factory, designed for AI product builders, enterprises, and software vendors to deploy open-source models with guaranteed uptime and predictable pricing.
Financials and valuation
Nebius is guiding for fiscal 2025 revenues of $500 million to $550 million, a tighter range compared to the previous estimate of $430 million to $630 million. The company also expects to reach an annual run rate (ARR) of $900 million to $1.1 billion by the end of 2025. For 2026, the company is guiding for ARR of $7 billion to $9 billion, of which over 50% is already booked. This steep ARR growth is driven by surging demand for AI compute and accelerated expansion plans for data centers.
Analysts expect Nebius' revenues to be nearly $578.2 million in fiscal 2025 and $1.68 billion in fiscal 2026. While the fiscal 2025 figure aligns closely with management guidance, the fiscal 2026 estimate seems too conservative. Nebius' own fiscal 2026 ARR target of $7 billion to $9 billion already translates into $1.75 billion to $2.25 billion of quarterly revenues. In that context, the analysts' 2030 revenue projection of $21.7 billion appears modest and achievable if the company maintains its momentum.
Currently, Nebius trades at a lofty valuation of 106.1 times sales, which is typical for an early-stage technology company delivering exceptional top-line growth. As the revenue base expands and growth rate normalizes, we can also expect a contraction in valuation multiples.
We can assume the price-to-sales (P/S) multiple compresses to a more reasonable 7x and 10x range by 2030, more in line with the average P/S multiple of a data center real-estate investment trust (REIT) of around 10.14x. Hence, the company's market capitalization can increase to the range of $151.9 billion to $217 billion. This is almost 641% to 916% higher compared to its current market capitalization (as of Nov. 13).
Nebius faces significant execution, financing, and competitive risks, which may negatively affect these projections. Hence, investors can opt for a dollar-cost averaging strategy to participate in the potential upside of this stock while controlling the downside risk.
