Nebius is The Neocloud Smart Enough to Not Get Caught in The Race to The Bottom
One neocloud keeps raising its prices while rivals slash theirs, and the logic behind that defiance runs deeper than most investors realize.
I keep adding to Nebius Group (NASDAQ:NBIS | NBIS Price Prediction), and the 21.36% drop over the past month has only made me add faster. The latest hit came from Microsoft (NASDAQ:MSFT), with Microsoft capex coming in below expectations. I use those moments to buy the one neocloud that refuses to compete on price alone.
My thesis: renting out GPUs by the hour leads to a race to the bottom, and Nebius has built a business that sets its own terms. Management put it simply on the August 12, 2026 call: “We choose when to sell, to whom we sell and on what terms, and how we finance everything.” That sentence explains why my position is the size it is.
Pricing Power Where Others See a Price War
Nebius said it can currently sell its entire planned 2027 capacity on existing midterm contract terms, and it chose to hold some of that capacity back. Midterm deals yield $20 million to $25 million per megawatt. Short-term deals are being negotiated at $40 million to $50 million per megawatt. Its first capacity auction cleared 15% above the highest Blackwell price it had ever charged. Clearing an auction above its own record price shows Nebius sets its own terms.
The margins back this up. Q2 revenue reached $582.3M, up 454.0% year over year, and cost of revenue fell to 23% of revenue from 29%. Group adjusted EBITDA margin rose to 41% from 32% in Q1. Token Factory, the Aether platform, and acquisitions like Tavily and Clarifai give customers reasons to stay that go beyond raw compute.
Visibility seals it for me as a long-term holder. Remaining performance obligations stand at $37.5B. About 70% of Q2 deals included an upfront prepayment, and management expects prepayments to bring in more than $9 billion in 2026. Customers are paying for the build.
Why My Money Goes Here Instead of CoreWeave
CoreWeave (NASDAQ:CRWV) is the obvious alternative, and it has scale, with a backlog of about $104 billion. I pass on it because of how much it owes. CoreWeave carries $72.046B in total liabilities against $5.024B in equity, which works out to a leverage ratio of 8.94. Nebius holds $17.62B in liabilities against $10.34B in equity, plus $8.04B in cash. CoreWeave’s Q2 interest expense hit $640 million. Nebius’s was $119.1M. Over the past year, CoreWeave shares fell 52.57% while Nebius gained 49.67%.
Risks I Refuse to Ignore
Nebius burns cash and dilutes shareholders. It posted a Q2 GAAP net loss of $190.4M and guides to $20 billion to $25 billion of 2026 capex. Its convertible debt has an $8.5B carrying amount and a $20.8B fair value. It also sold 12.7M shares through its at-the-market program. Three customers made up for 24%, 21%, and 14% of Q2 revenue. And a Gartner (NYSE:IT) forecast that 80% of the neocloud market will cease to exist by 2030 hangs over the whole group.
I accept these risks because Nebius funds itself in a reasonable order: operating cash flow and prepayments come first, then asset-backed debt like its $775 million facility priced at SOFR plus 250 basis points. It sold those ATM shares at an average of about $224, which is above today’s $182.34. Management issued stock when it was expensive. If most neoclouds go away, I want to own the one with pricing power and a solid equity buffer.
What Keeps Me Adding From Here
Nebius confirmed $3 billion to $3.4 billion in 2026 revenue and a year-end annualized run rate of $7 billion to $9 billion. It raised its contracted power target to 5 gigawatts and plans to build more than 1 gigawatt of new capacity a year in 2027 as Vera Rubin systems arrive. All that power and capacity has to be supplied by somebody, and we rounded up seven of the companies behind the AI expansion in a free report. Because there’s no dividend, it sits in the growth part of my portfolio, building the wealth that will later pay for my income holdings. Price wars hurt the sellers who have to take every deal, and Nebius has earned the right to turn deals down.
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Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
