Nebius Quadruples EBITDA as AI Cloud Revenue Surges 841%, But $25B Capex Plan Fans Debate

Nebius reports massive AI cloud revenue growth and margin improvement, but investor anxiety over $25B capex and Google-Blackstone JV weigh on stock. Analysts divided.

Nebius is walking a tightrope between explosive growth and investor anxiety over its massive spending commitments. The company’s AI cloud revenue soared 841% to $399 million in the first quarter, pushing adjusted EBITDA from a loss of $53.7 million to a profit of $129.5 million. Yet the stock wavered on Tuesday after a Google-Blackstone cloud joint venture worth $5 billion rattled sentiment and a D.A. Davidson downgrade weighed on early Nasdaq trading, sending shares down 7.5% to $184.84 before they recovered to close at $197.78.

The cloud expansion has transformed Nebius’s margins. The AI segment’s adjusted EBITDA margin jumped to 45% in Q1 from 24% in the prior quarter, a leap the company attributes to scarce GPU supply and pricing power. Management says four or more customers compete for every newly available graphics processor, a dynamic that should underpin utilisation and pricing as long as capacity remains tight. The annualised revenue run rate hit $1.92 billion at the end of March, well above analyst expectations.

Wall Street remains divided on whether the valuation can hold. Citigroup’s Tyler Radke lifted his price target by 70% to $287, calling the quarter a “clean beat” and pointing to potential upside from cautious guidance. Citizens analyst Greg P. Miller raised his target to $270, citing “hypergrowth” and Nebius’s tight control over data centres and power supply. Northland set a $248 target and Bank of America $240, both maintaining Buy ratings. At the other extreme, Morgan Stanley’s target of $144 carries an Equal-weight rating, acknowledging faster capacity expansion but warning the current share price around $190 already prices in aggressive growth.

The company’s capex plans inject further uncertainty. Management raised its 2026 investment budget to as much as $25 billion — a staggering sum for a firm that still booked a $100 million adjusted net loss in Q1. Nebius argues the spending is necessary to lock in infrastructure ahead of demand. Contracted power capacity already exceeds 3.5 gigawatts, with a target of more than 4 GW by year-end. A new AI factory in Pennsylvania is slated to come online in 2027.

Nebius’s balance sheet provides a cushion for now. The quarter ended with over $9 billion in cash, bolstered by a multi-billion-dollar equity investment from Nvidia and convertible note issuances. Yet the market cap of roughly $55 billion means the stock trades at about 17 times expected annual revenue, a multiple that leaves little room for execution missteps.

The pending acquisition of Eigen AI adds another layer. Announced on May 1, the deal includes up to $98 million in cash and 3.8 million Class A shares. The transaction, expected to close in the coming weeks pending regulatory approval, is designed to bolster Nebius’s Token Factory platform and accelerate the build-out of a Bay Area research site.

For now, the bull case rests on capacity scarcity and margin momentum. The next catalyst will be closing the Eigen AI deal, after which the focus shifts to how fast Nebius can bring new capacity online without diluting the 45% EBITDA margin that has made it a standout in the crowded AI cloud market.