Nebius (NBIS) is quickly becoming one of the hottest names in artificial intelligence (AI) infrastructure, selling out all the cloud capacity it brings online. Investors are paying attention, as Nebius stock has soared 218% so far this year, far outperforming tech heavyweights. With multi-million dollar contracts already secured with Microsoft (MSFT) and Meta Platforms (META), the company may be at the beginning of a massive growth story.
Let’s find out if now is the right time to buy Nebius stock.
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Nebius builds a full-stack AI infrastructure and operates a cloud platform designed specifically for AI-intensive workloads. Its AI cloud capability is powered by Nvidia hardware. It sells cloud capacity to large technology companies and AI startups, helping them train and run large AI models.
In addition to its core business, it also owns and operates brands such as Avride, a self-driving company, and TripleTen, a technology education company. Nebius also owns equity stakes in other companies, including ClickHouse and Toloka.
Nebius’ third-quarter results showed a fast-growing AI cloud company racing to keep up with extraordinary demand. Group revenue reached $146 million, up 355% year-over-year and 39% sequentially. The core infrastructure business, which accounts for more than 90% of revenue, increased 400% year over year, with adjusted EBITDA margins increasing to nearly 19%. According to management, revenue growth was limited only by the pace at which additional capacity was brought online.
CEO Arkady Volozh commented that the third quarter saw a new surge in demand for capacity, with every unit of infrastructure brought online quickly sold out. He went on to say that while demand is high, supply is the only limiting factor on revenue.
What has piqued investor interest is that demand is now translating into multi-million dollar partnerships. In the quarter, Nebius announced a new five-year, $3 billion deal with Meta Platforms following the previously revealed pact with Microsoft. Volozh noted that the size of the Meta deal was limited only by available capacity, showing the amount of unmet demand for Nvidia-powered AI infrastructure, particularly as the new Blackwell generation arrives.
Prior to this, in September, Nebius announced a multi-year deal with Microsoft. Under the agreement, Nebius will provide specialized AI capacity from its new data center in Vineland, New Jersey, starting later this year. Volozh anticipates the deal will accelerate the growth of Nebius’ AI cloud business into 2026 and beyond.
While all eyes are on mega deals, Nebius emphasized that its core AI cloud platform remains its long-term value driver. The company recently announced two key product releases: Aether 3.0, an enterprise-ready cloud platform designed to deliver trust and control, and Nebius Token Factory, a production-grade inference solution for running open source models at scale.
Nebius also plans to reach 2.5 GW of contracted power in 2026, exceeding its initial goal of 1 GW. It intends to have between 800 MW and 1 GW of fully operational capacity connected to data centers by the end of 2026. This accelerated construction helps Nebius achieve its goal of an annualized run rate (ARR) of $7 billion to $9 billion by the end of next year. The company intends to finance its aggressive development with a combination of corporate debt, asset-backed financing and a new equity market program worth up to 25 million shares. However, he stressed that he will avoid diluting the ownership of existing shareholders.
For the full year, the company expects between $500 million and $550 million in revenue, which will represent a year-over-year increase of 346% at the midpoint. Analysts expect revenue growth in the same range, with another 454% increase in 2026 to $3.07 billion. Looking ahead, management reaffirmed that it will reach between $900 million and $1.1 billion ARR by the end of 2025, and that Microsoft and Meta revenue will increase significantly in 2026.
Overall, Nebius stock has earned a “Moderate Buy” rating from the Street. Of the six analysts covering the stock, five have a “Strong Buy” recommendation, one rates it a “Moderate Buy” and two rate it a “Hold.” Wall Street sees a potential upside of 81% from current levels based on its average price target of $150.83. Furthermore, the high price estimate of $211 implies a potential upside of 153.4% ​​over the next 12 months.
The company sees a massive and expanding AI cloud market ahead and is building infrastructure, signing customers, and scaling products at a breakneck pace to capitalize on it. While sales growth is impressive, Nebius remains unprofitable and may be better suited for investors with a high risk tolerance.
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On the date of publication, Sushree Mohanty had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
