Nebius Group Secures Approval for Major US Data Center Project

Nebius gets approval for a major US data center campus, yet stock volatility and a local referendum highlight investor worries over execution and massive capital expenditure.

Investor sentiment toward Nebius Group remains cautious despite a significant regulatory milestone for the company's ambitious expansion plans. The cloud and AI infrastructure provider has received the green light to develop one of the largest data center campuses in the United States, yet the market's reaction highlights deep-seated concerns over the project's immense costs and execution risks.

Market Volatility Reflects Investor Jitters

Trading activity following the announcement captured the market's conflicted outlook. Shares initially surged more than 10% on the news but proceeded to relinquish nearly all of those gains over the subsequent week. The stock recently traded around $89, well below its intraday peak of nearly $98 reached after the approval.

This price action is characteristic of the highly volatile AI infrastructure sector. Over the past year, Nebius shares have traded within an extreme range, from a low of $18 to a high of $141, underscoring the pronounced nervousness among market participants.

"Project Independence" Gains Conditional Approval

The city council of Independence, Missouri, voted last Tuesday to approve plans for the new AI campus, dubbed "Project Independence." The facility is designed to eventually reach a capacity of up to 1.2 gigawatts, which would make it Nebius's largest installation in the U.S. to date. The agreement includes long-term tax incentives for the company. In return, the city and local authorities are projected to receive $650 million over a 20-year period.

However, the launch faces local political hurdles. A citizen-led initiative has announced plans to gather signatures for a referendum challenging the tax incentives. If enough signatures are collected within 30 days, voters would decide on the project later this year. This introduces ongoing regulatory uncertainty, even though the first power delivery for the campus is not scheduled until the second half of 2026.

Explosive Growth Contrasts with Mounting Costs

From a fundamental perspective, Nebius presents a story of extremes. The company's revenue for fiscal 2025 skyrocketed 479% to approximately $530 million. Despite this top-line explosion, it continued to report operating losses, driven largely by substantial infrastructure depreciation charges.

The cornerstone of the bullish thesis is a substantial backlog of orders exceeding $20 billion. This includes major contracts with industry giants Meta and Microsoft, with the Microsoft deal alone valued at over $19 billion. Management has confirmed that the number of long-term contracts has nearly doubled and that average selling prices have risen significantly.

Financing a Massive Capital Expenditure Plan

The scale of growth necessitates equally massive investment. For 2026, Nebius has outlined capital expenditure (CapEx) plans between $16 billion and $20 billion to expand its capacity to up to one gigawatt. The company states that roughly 60% of the required financing is already secured. Furthermore, customer prepayments totaling $830 million provide additional liquidity, yet the sheer magnitude of the spending remains a formidable challenge.

Additional attention for the stock could arise from a potential inclusion in the Bloomberg 500 Index on March 12. Such a move would trigger automatic buying from index-tracking funds (ETFs), likely boosting the equity's liquidity.

Execution is Now the Critical Test

The Missouri approval formally ties Nebius's business model to the tangible risks and demands of a specific mega-project. The focus for the company shifts decisively from announcement to operational execution. Given the enormous capital requirements and local political obstacles, the management's ability to deploy infrastructure on schedule and efficiently convert its hefty order backlog into revenue will be the primary determinant of the stock's future trajectory.