Nebius Pushes Into Higher-Margin Software with Clarifai as Q1 Sales Quadruple and Capex Hits $25B

AI infrastructure provider Nebius shifts up value chain with Clarifai acquisition, posts $399M Q1 revenue (up 684%), raises capex to $25B, targeting $3B revenue by 2026.

Nebius Group is no longer content to be just a landlord for GPUs. The Amsterdam-based AI infrastructure provider has signalled a decisive shift up the value chain, absorbing the core engineering team of Clarifai — a specialist in AI inference and compute orchestration — to feed its own Token Factory platform. The May 12 deal brings on board Clarifai founder Matthew Zeiler, a machine-learning pioneer, as senior vice president of research, along with a licensed patent portfolio.

The move builds on two prior acquisitions — Eigen AI and Tavily — as Nebius assembles an end-to-end stack that can handle complex, multimodal models in production. It is a pattern familiar from the largest cloud hyperscalers: the real margins sit in the software layer above the silicon.

Those ambitions rest on a set of first-quarter numbers that caught the market off guard. Revenue hit $399 million, a 684% leap from the same period a year earlier, with the AI segment alone climbing 841%. Adjusted EBITDA swung from a minus $54 million loss to a positive $130 million. The secret is pricing power: demand for Nebius’s GPU capacity exceeds supply, and the company raised prices during the quarter without losing a single customer. Active server capacity sold out, driving the adjusted EBITDA margin in the AI business to 45%, up from 24% in the prior quarter. Annualised recurring revenue reached $1.92 billion, a sequential increase of over 50%.

Wall Street responded with a barrage of target-price upgrades. Citizens lifted its price objective to $270 from $175, citing capacity expansion and pricing leverage. DA Davidson went to $250 from $200 with a “Buy” rating. Goldman Sachs raised its target to $205 from $160, also “Buy”. Northland bumped its price to $248 from $215, and Morgan Stanley edged up to $144 from $126, keeping an “Equal Weight” stance.

The stock surged as much as 21% on the day, helped by a short squeeze. More than a fifth of the free float was sold short, and the sharp upward move forced bears to cover, adding fuel to the rally. Since the start of the year, shares have gained roughly 134%, pushing the market capitalisation above $52 billion — about 16 times expected revenue for the current year.

Management is not letting up on investment. For the full year 2026, Nebius targets revenue of $3.0 billion to $3.4 billion and an annualised recurring revenue run-rate of $7 billion to $9 billion. To get there, capital expenditures have been raised to a range of $20 billion to $25 billion, up from a previous $16 billion to $20 billion. The company had $9.3 billion in liquidity at the end of the quarter to fund the build-out.

But the pace of spending introduces risk. Wolfe Research has flagged concerns around execution and financing as the infrastructure programme scales. Analysts do not expect Nebius to report net profit for at least the next two years, and the valuation — 16 times forward sales — leaves little room for missteps. Management itself warned that second-quarter margins could dip temporarily as new server capacity comes online.

The question hanging over the stock now is whether the Token Factory platform can translate Nebius’s heavy capital outlays into sustainable margin expansion. The Q2 numbers will provide the first real test of that narrative.