Nebius Group Faces Investor Scrutiny After Aggressive Spending Overshadows Growth

Nebius shares fell 9% as a $20B capex plan overshadowed 500% revenue growth. The AI firm missed Q4 estimates but sees strong future demand with $1.25B ARR.

Shares in artificial intelligence infrastructure provider Nebius Group came under significant pressure following its latest earnings release, as concerns over its colossal investment program eclipsed another period of explosive revenue growth. The market's reaction highlights growing investor unease about the cost of the company's rapid expansion.

Market Reaction and Quarterly Performance

Trading on Friday saw Nebius equity decline by nine percent to $97.92 amid elevated volume. This sell-off was triggered by the company's fourth-quarter 2025 report, which presented a mixed financial picture. While year-over-year revenue skyrocketed by over 500% to reach $227.7 million, this figure fell short of Wall Street's consensus estimate of approximately $246 million. Furthermore, the loss per share of $0.69 was wider than analysts had projected.

Company leadership attributed the revenue shortfall to the timing of new capacity coming online. The majority of this additional computing power only became operational in late November, contributing minimally to the full-year 2025 results. A forward-looking metric, however, signals strong underlying demand: the annual recurring revenue (ARR) for the core business hit $1.25 billion by year-end, exceeding the company's own forecast.

Soaring Ambitions and Staggering Capital Expenditure

Despite the optimistic revenue guidance for 2026, which targets up to $3.4 billion, analyst focus has sharpened on the associated costs. Nebius has outlined capital expenditure plans for the current year ranging from $16 billion to $20 billion. Management asserts that operational cash flow will fund the bulk of this outlay, but the sheer scale of the planned investment has raised questions about near-term capital efficiency and profitability.

Operationally, the expansion continues at pace. Available power capacity reached 170 megawatts by the end of the year, substantially above the originally planned 100 megawatts. This infrastructure build-out is being complemented by strategic moves, including the planned $275 million acquisition of search startup Tavily. This purchase is intended to enhance the AI platform by integrating real-time web search capabilities for autonomous AI agents.

Volatility and the Path Ahead

The stock's trajectory remains highly volatile. The recent pullback leaves the share price trading roughly 27% below its October 2025 peak. Over the past year, the equity has swung between a low near $18 and a high of $141, underscoring its speculative nature during this intensive growth phase.

Nebius now faces a critical period of demonstration. The executive team must prove that its massive investment, potentially reaching $20 billion, can be efficiently converted into the projected revenue streams. The upcoming quarterly report on April 29, 2026, will serve as a key indicator of whether this aggressive growth strategy is beginning to yield tangible results.