Nebius Group’s latest quarterly report shows a breakout performance for Nebius AI Cloud. The company’s ability to make money from a fast-growing data-center AI infrastructure ecosystem stands out.
This post breaks down the key numbers, what’s driving the profit and margin expansion, and how analysts are reacting—since that could shift the stock’s near-term path.
Nebius Group delivers blockbuster quarter signaling strong AI infrastructure demand
In a quarter that got investors talking, Nebius Group reported total revenue of $399 million, up 684% year over year. That beat estimates by about $10.43 million.
The AI Cloud segment, called Nebius “Nebius AI Cloud”, basically stole the show, pulling in $389.7 million—an eye-popping 841% YoY increase.
Annual recurring revenue (ARR) jumped to $1.9 billion, which is more than a 50% rise from last quarter. Gross margin expanded to 74.1%, a 417-basis-point improvement and well above the 66.1% consensus.
Adjusted EBITDA hit $130 million, a big turnaround from last year’s loss and about $30 million more than analysts expected. Management raised FY26 CapEx guidance by $4.5 billion to a midpoint of $20–$25 billion because they see clear demand into FY27.
They left revenue, ARR, and EBITDA margin outlooks unchanged. Execution stayed strong as active capacity remained sold out, and Nebius kept its pricing power on GPUs across different generations.
Financial highlights
Here are the main numbers that shaped the quarter:
- Total revenue: $399 million (+684% YoY; beat by $10.43 million)
- Nebius AI Cloud revenue: $389.7 million (+841% YoY)
- ARR: $1.9 billion (↑ >50% sequential)
- Gross margin: 74.1% (up 417 bps sequential)
- Adjusted EBITDA: $130 million (vs. ~<$100 million expected; ~$30 million ahead)
- CapEx guidance FY26: raised to midpoint $20–$25 billion
- Outlook: revenue, ARR and EBITDA margin guidance left unchanged
AI Cloud growth and ARR trajectory
Nebius AI Cloud revenue soared thanks to strong pricing on new contracts and more on-demand capacity. The business keeps benefiting from steady demand for AI infrastructure and tight capacity, which helps maintain pricing power.
ARR growth points to a lasting shift in customer mix. Non-hyperscaler buyers now contribute more to profitability, bringing higher margins and stickier revenue streams.
The CFO and leadership said active capacity is still fully booked, showing demand for Nebius’ GPU-enabled platform isn’t slowing down. GPU pricing across generations remains solid, with current demand supporting a strong pricing environment as AI workloads keep spreading across industries.
Operational momentum: capacity, pricing, and power commitments
Capacity expansion and power commitments stood out this quarter. Nebius contracted 3.5 gigawatts of power capacity, beating its earlier 3 GW target.
Management bumped up CY26 contracted power guidance to 4 GW. This bigger footprint matches their belief that high-performance computing demand won’t fade as the next cycle of AI deployments rolls in.
Analysts are watching closely to see how all this capacity growth turns into long-term profitability and changes in ARR. The focus on non-hyperscaler customers—basically, those outside the major cloud giants—seems to be driving higher-margin revenue and a broader, more diverse customer base.
Analyst view and stock outlook
Northland analyst Nehal Chokshi raised his CY26 ARR estimate to $8 billion, putting it right in management’s $7–$9 billion target range. He pointed to a pipeline expansion that could push non-hyperscaler ARR toward $16 billion.
Chokshi also noted the non-hyperscaler pipeline grew 3.5x QoQ and is nearing four customers per GPU deployed, which hints at a wider base of high-margin customers. He bumped his price target from $215 to $248 and stuck with an Outperform rating.
Even with shares trading about 11% above consensus, most analysts still see Nebius as a Strong Buy candidate. The setup in AI infrastructure and Nebius’ knack for monetizing GPU demand efficiently have them convinced.
What this means for investors
For investors, this quarter tells a pretty compelling story. Nebius is monetizing a fast-growing AI compute market, and that pricing power is leading to better margins and a bigger, stickier ARR base.
The new CapEx outlook shows real confidence in steady demand through FY27. Meanwhile, the company’s focus on the non-hyperscaler segment hints at a more diverse revenue mix, which—if you ask me—could open up several paths for multiple expansion as AI workloads keep spreading into different industries.
Here is the source article for this story: Nebius (NBIS) Is Surging – Here’s Why the AI Stock Gets a New Price Target From Top Analyst