Until you look at the numbers for a minute, they don’t seem quite real. Nebius Group recently reported first-quarter revenue of $399 million, a 684% increase from the same period last year. Two years ago, most American investors could not have located Nebius Group on a map. The stock closed Tuesday at $197.73, down roughly 1% for the day, but that minor decline belies a much more dramatic tale. In 2026, shares have more than doubled. Just last week, they reached $233.73. Additionally, executives in Amsterdam are probably making a great effort to avoid appearing shocked.
Observing this gives the impression that the market is still trying to figure out what Nebius is. The company refers to itself as an AI-native cloud provider, which is a term that only engineers understand. In reality, it operates Nvidia GPU warehouses and rents them out, primarily to businesses that train big language models. The idea is straightforward: Nebius built its cloud from the ground up for the kind of dense, power-hungry computing that artificial intelligence demands, whereas hyperscalers like Amazon and Google built theirs for general workloads. No one is yet able to honestly respond to the question of whether that distinction will matter in five years.
Unquestionably, the company has a few very big clients who are prepared to write very big checks. The five-year Meta deal alone, which was signed earlier this year, has the potential to be worth $27 billion, including $12 billion in dedicated capacity and an additional $15 billion that Nebius can either supply to Meta or sell elsewhere. Nvidia has invested about $2 billion in the business. Nearly $19.4 billion was signed by Microsoft in connection with that data center in Vineland, New Jersey, of all places. It’s difficult to ignore how a tiny town in South Jersey has somehow grown to be a vital component of the AI infrastructure boom.
Then Tuesday arrived. A joint AI cloud project was announced by Google and Blackstone, with Blackstone contributing $5 billion in equity and the partners aiming for 500 megawatts by 2027. Nebius shares dropped as low as $183.42 before rising 7.5% in Amsterdam trading. After months of bullishness, D.A. Davidson downgraded the stock to Neutral. The Journal was informed by analyst Gil Luria that his company was “taking a breather,” which is a polite way of stating that the run had gotten ahead of itself. The $250 price target was maintained. The zeal did not.
Days earlier, however, Citi reversed course and raised its target from $169 to a street-high $287. The bull case is based on a pipeline that expanded three and a half times quarter over quarter, contracted capacity already exceeding 3.5 gigawatts, and what management characterizes as numerous clients vying for each GPU brought online. It’s a neat tale. It’s costly as well. Compared to a sector median of about three, NBIS trades at about sixteen times sales. The P/E ratio is higher than 64. It’s obvious that investors are paying for growth they haven’t yet witnessed.
Beneath the headline figures, the risks mount. The previous range of $16 to $20 billion for capital expenditures for 2026 was recently increased to between $20 and $25 billion. Despite a positive swing in EBITDA, adjusted net loss actually increased year over year. Over the last three months, insiders have sold about $122 million worth of shares, including board member Marc Boroditsky’s recent sale of 4,500 shares. That’s not necessarily damning. Stock investors who become wealthy sell their stock. However, it’s the kind of detail that sticks.
The earnings transcript makes it clear how much of the company’s future is dependent on tangible things, such as power hookups, Pennsylvania land permits, and on-time GPU shipments. The AI industry frequently seems abstract, replete with sophisticated models and software. Nebius reminds you that substations, copper, and concrete are also involved. Years ago, there were similar concerns about Tesla’s ability to build at scale. After a while, it did, but the journey there was not easy. It’s genuinely still unclear if Nebius achieves something similar or if the neocloud boom proves to be one of those moments that investors look back on with a wince.
