Nebius Turns to Fuel Cells for AI Cloud Power as Q1 Revenue Skyrockets 684% and Capex Hits $25B

Nebius bets on Bloom Energy fuel cells for off-grid power amid explosive AI cloud growth, reporting $399M Q1 revenue and a $1.9B ARR pipeline with Nvidia, Microsoft, and Meta.

Scaling a cloud business built on artificial intelligence demands more than just the latest chips. It requires enormous amounts of electricity, and in many regions the grid simply cannot keep up. Nebius has found a workaround: a decade-long, $2.6 billion deal with Bloom Energy to install solid-oxide fuel cells directly at its data centre sites, guaranteeing around 250 megawatts of off-grid capacity. The first project will break ground later this year in Independence, Missouri, replacing an earlier plan to use conventional gas turbines and sidestepping the long permitting queues that plague traditional power connections.

The urgency behind that move becomes clear from the first-quarter numbers. Nebius generated $399 million in revenue, a 684 percent leap from the $50.9 million it reported a year earlier. Nearly all of that — $389.7 million — came from its AI cloud platform, which minted $1.9 billion in annualised recurring revenue by the end of the period. The pipeline includes active contracts with Nvidia, Microsoft and Meta, and the company has already raised its 2026 capex budget by $4.5 billion to a range of $20 billion to $25 billion.

But explosive growth comes at a cost — literally. Operating expenses hit $527 million in the quarter, leaving an operating loss of $128 million, wider than the $83.6 million loss a year ago. The rapid build-out of GPU capacity, data centre infrastructure and engineering teams is burning through cash even as top-line expansion accelerates.

On the balance sheet, Nebius looks well protected. It held $9.3 billion in cash at the end of March against $8.45 billion in debt. A net profit of $621.2 million flattered the picture, though that figure was lifted by a $780.6 million non-cash revaluation gain from its stake in ClickHouse.

The strategic bet is that securing its own power supply will give Nebius an edge in a market where hyperscalers and startups alike are scrambling for electricity. The Bloom Energy fuel cells, placed right at the data centre campus, not only cut emissions but also allow Nebius to bring new AI clusters online faster than rivals who depend on grid hook-ups. The company targets 4 gigawatts of contracted power capacity by year-end and says it has already locked in 3.5 gigawatts through land purchases and electricity agreements in regional hubs.

Market sentiment, however, is mixed. DA Davidson downgraded the stock to Neutral on May 18, arguing that the recent rally had run ahead of near-term earnings potential. Citigroup took the opposite view, lifting its price target to $287 on May 15 and betting on long-term infrastructure demand. The analyst consensus remains a Buy, with an average target of $221.71.

Insider activity has added a note of caution. Marc Boroditsky, chief revenue officer, sold 4,500 shares at an average $217.55 on May 15. Andrey Korolenko offloaded 500,000 shares at $203.24 two days earlier, both moves executed under pre-arranged trading plans.

Looking ahead, management has stuck to its full-year revenue guidance of $3.0 billion to $3.4 billion, and projects the annualised run rate will hit $7 billion to $9 billion by December. The tension between breakneck top-line growth and the capital intensity of the build-out is the central question for investors: can the revenue surge eventually absorb the soaring fixed costs, or will the weight of the $25 billion expansion keep profit margins underwater for longer than the market expects?