Nebius Flexes Pricing Muscle as AI Cloud Revenue Hits $399M, Sparking a Wave of Analyst Upgrades and a $4.5B Expansion

Nebius Q1 revenue surged 684% to $399M, AI cloud up 841%, margins doubled. GPU demand exceeds supply, short squeeze drove 21% stock rally. Analysts raise targets; company builds gigawatt-scale AI factory.

Nebius delivered the kind of quarter that growth investors dream of: revenue tripling year-over-year, margins more than doubling, and pricing power so strong that customers are buying every available GPU — even after price increases. The stock surged as much as 21% in a single session, and the rally had extra fuel: more than a fifth of the freely traded shares were sold short, forcing bearish traders to cover as the price climbed.

The headline numbers alone explain the excitement. First-quarter revenue reached $399 million, a staggering 684% jump from a year earlier and 75% higher than the prior quarter. Almost all of that — $390 million, or 98% of total sales — came from AI cloud services, a segment that grew 841% year-over-year. Management also reported that adjusted EBITDA margin improved from roughly 23% to 45%, putting the company on track for its long-term target of 20%–30% EBIT margins.

Behind the top-line explosion is a simple dynamic: demand for Nebius’ GPU infrastructure continues to outstrip supply. The company raised prices during the quarter and still sold out across all chip types. That pricing leverage is reflected in the annualized recurring revenue figure, which hit $1.92 billion at the end of March, up from $1.25 billion just three months earlier. The rapid conversion of new contracts into recurring revenue is a key reason analysts have rushed to update their models.

Several Wall Street firms raised their price targets after the results. Citizens lifted its target to $270 from $175, citing capacity expansion, strong pricing, and high utilization. DA Davidson moved its target to $250 from $200, keeping a Buy rating. Goldman Sachs increased its price objective to $205 from $160, maintaining a Buy stance. Not everyone was equally bullish: Morgan Stanley raised its target only to $144 from $126 and kept an Equal Weight rating, suggesting the stock’s recent run has already priced in much of the upside.

Wolfe Research, which initiated coverage with a Peer Perform rating, offered the most cautious take. It pointed to execution and financing risks, even as the company has locked in big-name customers such as Microsoft and Meta. Wolfe’s fair value range of $80 to $170 sits well below the current share price.

Nebius is simultaneously expanding its own infrastructure to capture more of the value chain. On May 12, the company broke ground on an AI factory campus in Independence, Missouri — the first U.S. digital infrastructure project built at gigawatt scale. The site spans roughly 400 acres and is expected to create about 1,200 construction jobs and 130 permanent positions. More importantly, owning the facilities gives Nebius greater control over its cost base, which should support margins if utilization remains high.

The company has also secured a second major site in Pennsylvania with the potential to draw up to 1.2 gigawatts of power. That would give Nebius two locations with more than a gigawatt of capacity each. The expanded build-out comes at a price: the company raised its 2026 capital expenditure forecast by $4.5 billion to the midpoint of its previous range. At the end of the quarter, Nebius had $9.3 billion in cash and equivalents, partly from convertible bonds and an equity investment by Nvidia.

On the commercial side, TD SYNNEX has added dedicated NVIDIA HGX B300 clusters from Nebius AI Cloud to its infrastructure-as-a-service offering, giving enterprise clients reserved access to GPU capacity. That kind of distribution deal underscores the demand that the company is banking on.

Yet the valuation remains a sensitive topic. At a market capitalization above $52 billion, the stock trades at roughly 16 times expected 2026 revenue. Nebius forecasts full-year sales of $3.0 billion to $3.4 billion and aims for annualized recurring revenue of $7 billion to $9 billion by the end of next year. The company also warned that second-quarter margins may dip temporarily as new server capacity comes online. With no net profitability expected in 2026 or 2027, the market is betting that growth will continue to outpace costs — a bet that short sellers, at least for now, appear to be losing.