Nebius Group (NASDAQ:NBIS) has delivered 681% gains over the past year, and the neocloud buildout continues to attract attention. The buildout is real, execution is real, and the opportunity appears to dwarf what the market has priced in.
Reason 1: The Revenue Trajectory Is Unlike Anything Seen in the Sector
When a company posts $227.7 million in Q4 2025 revenue, up 503.6% year-over-year, analysts pay attention. When it exits the year with an annualized run-rate of $1.25 billion and guides for $7 billion to $9 billion ARR by end of 2026, it warrants a closer look. Full-year 2025 revenue came in at $529.8 million, up 350.89% year-over-year. The AI cloud segment alone generated $214.2 million in Q4, representing 94% of total group revenue. CEO Arkady Volozh said it plainly on the Q4 earnings call: “Everything we build, we sell.”
Reason 2: The EBITDA Inflection Tells Us the Business Model Works
Adjusted EBITDA strips out aggressive infrastructure depreciation and shows whether the core business is economically viable, a more relevant lens given Nebius’s heavy investment phase. In Q4 2025, group adjusted EBITDA turned positive for the first time at $15 million, compared to a loss of $63.9 million a year earlier. The AI cloud segment reached a 24% adjusted EBITDA margin in Q4, up from 19% in Q3. Operating leverage is visible: cost of revenue declined from 60% to 30% of revenue year-over-year in Q4 2025. Management guides for a group adjusted EBITDA margin of approximately 40% for full-year 2026. That is a company scaling toward profitability at an accelerating pace.
Reason 3: The Moat Is Contractual, Not Just Narrative
Nebius has locked in demand before capacity exists. The company holds a multi-year deal with Microsoft (NASDAQ:MSFT | MSFT Price Prediction) valued at $17.4 billion to $19.4 billion and a roughly $3 billion AI infrastructure agreement with Meta Platforms (NASDAQ:META) over five years. Customers include Cloudflare (NYSE:NET), Shopify (NYSE:SHOP), World Labs, and Cursor. Nebius was the first in Europe to deploy NVIDIA (NASDAQ:NVDA) HGX B300 Blackwell Ultra and holds NVIDIA Exemplar Status for training workloads.
The contracted power target has been raised to more than 3 gigawatts by end of 2026, up from 2.5 gigawatts, with nine new data center sites across the US and EMEA. Volozh described the demand environment: “Even before we bring capacity online, it is often sold out.” The combination of pre-sold capacity, exclusive hardware status, and long-term contracts creates durable competitive positioning.
The Risk to Acknowledge
Free cash flow is challenging: Nebius burned $3.664 billion in free cash flow in FY2025, and the company has committed $16 billion to $20 billion in capital expenditures for 2026, with customer concentration risk in Microsoft and Meta. This has not altered the broader thesis because the company holds $3.678 billion in cash, successfully raised $4.3375 billion in convertible notes with strong institutional demand, and management has laid out a clear plan to finance 60% of CapEx needs from cash flows, balance sheet, and long-term agreement upfront payments.
Why the Bull Case Remains Intact
With 93.47% year-to-date gains already in the books and Q1 2026 results expected between April 29 and May 21, the next catalyst is close. The forward P/E sits at 68x for a company guiding toward a near-sevenfold increase in annualized revenue within 12 months. The 11 of 14 analysts rating Nebius a Buy or Strong Buy with an average price target of $162 tells us Wall Street is starting to recognize the opportunity. Volozh framed it best: “We are in the very early days of one of the biggest industrial and technological revolutions in history.”
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