Nebius Bets $98 Million on Software as Capacity Race Hits Critical Juncture

Nebius posts 684% revenue jump to $399M, turns profitable with 45% EBITDA margin, but $25B capex and high valuation spark debate. Acquires Eigen AI for software edge.

The market is watching Nebius with a split personality. On one side stand the optimists, pointing to a 684% revenue surge and a profitability turnaround that has pushed the adjusted EBITDA margin to 45%. On the other, skeptics who see a stock priced at roughly 16 times expected sales and a $25 billion capital expenditure program that leaves no margin for error. This week, the company’s strategic move to acquire Eigen AI for up to $98 million in cash and 3.8 million Class A shares underscores a broader pivot: raw computing power alone will not win the AI infrastructure race.

Nebius reported first-quarter revenue of $399 million, up from virtually nothing a year earlier, and an adjusted operating profit of around $130 million — a dramatic swing from the prior year’s loss. Customer prepayments have flooded in, carrying more than $2.2 billion onto the balance sheet. The annualized revenue run-rate stood at $1.92 billion at the end of March, and management targets $7 to $9 billion. Yet the share price, which closed at $217.86, already reflects much of that future success, with a 12-month range that stretched from $35 to $234.

The Eigen AI acquisition is about adding a software layer to Nebius’s hardware-heavy offering. Eigen specializes in inference and model optimization — precisely the tools needed to make Nebius’s Token Factory platform more competitive against rivals that lean on off-the-shelf hardware. The deal is structured as a mix of cash and 3.8 million Class A shares, with key Eigen personnel subject to vesting rules. Completion hinges on standard conditions, including antitrust clearance. The logic is clear: differentiation through software, not just kilowatts.

But kilowatts remain the primary bottleneck. Nebius has secured more than 3.5 gigawatts of contracted capacity and is aiming to push that figure above 4 gigawatts by year-end, with more than three-quarters coming from owned facilities. In Pennsylvania, a site is being developed for up to 1.2 gigawatts, with phased deliveries starting in 2027. A similar-scale AI factory is under construction in Missouri. By the end of this year, the company expects to have 800 megawatts to 1 gigawatt of connected power online, with a major ramp visible in the third quarter.

That ramp is make-or-break. Without electricity, the order book cannot become revenue. The company’s $25 billion capex plan, cushioned by $9 billion in liquidity, funds this build-out. Morgan Stanley laid out the stakes in stark terms: in a bullish scenario, the stock could reach $400 per share — but that requires Nebius to bring more than 5 gigawatts online by 2030. The bank’s base case target of $144, while raised from $126, still sits well below the current share price, and it maintains an “Equal-weight” rating.

Other analysts take a more generous view. Citi raised its target to $287 from $169, Citizens to $270 from $175, and Compass Point to $260 from $150. Goldman Sachs rates the stock a “Buy” with a $205 target, while DA Davidson lifted its view to $250. Wolfe Research initiated coverage with “Peer Perform,” citing demand from Microsoft and Meta contracts but flagging execution and financing risks for the project pipeline.

A fresh distribution deal with TD SYNNEX gives Nebius access to a broad partner network, supplying its AI cloud platform and NVIDIA HGX B300 clusters for the distributor’s AI infrastructure-as-a-service offering. That should help convert the backlog into recurring revenue.

For now, attention centers on two near-term catalysts: closing the Eigen AI acquisition and delivering evidence of the capacity jump in the third quarter. If the ramp hits its marks, the annualized revenue target inches closer. If power or hardware slip, the stock’s premium — already a multi-billion-dollar bet on future execution — will be tested.