Nebius Doubles Down on 5-Gigawatt Target as Investors Weigh the Cost of AI’s Land Grab

The arithmetic behind Nebius’ growth story is getting harder to ignore — and harder to finance. On Friday, shares in the Amsterdam-listed AI infrastructure group climbed 7.5 percent to close at €194.76, part of a broader advance across cloud-infrastructure names such as CoreWeave and IREN that had no company-specific catalyst attached. The stock has now gained 165 percent since the start of the year, putting its market capitalization at roughly €49 billion.

Yet the rally masks a more complicated picture. Nebius has raised its contracted power-capacity target for the end of 2026 to 5 gigawatts, up from 3 gigawatts in February and 4 gigawatts in May. That rapid escalation speaks to surging demand for AI compute, but it also underscores the scale of capital required to deliver on those promises — and the risk that capacity outruns utilization.

The Numbers Behind the Ambition

Nebius reported second-quarter revenue of $582.3 million on August 12, up 454 percent year over year. Its AI business grew even faster, climbing 514 percent to $575 million and now representing 98 percent of group revenue. Adjusted EBITDA swung from a loss of $21 million to a positive $236.2 million, while first-half revenue reached $981.3 million, a 529 percent increase. Management reaffirmed its full-year guidance of $3.0 billion to $3.4 billion in revenue, with an annualized run-rate target of $7 billion to $9 billion.

Those figures carry extra weight because of what Nebius is spending to sustain them. Capital expenditures on property, plant, equipment, and intangible assets hit $5.66 billion in the second quarter alone, versus $510.6 million in the year-earlier period — a more than tenfold increase in twelve months. The $5.75 billion convertible bond offering, which closed last Monday, was designed precisely to fund this capacity build-out. The stock rose 9.6 percent on the news, and added another 6.1 percent after shareholders approved all resolutions at the annual general meeting roughly two weeks ago.

Contracts Signal Corporate-Level Demand

The bull case rests on whether that investment translates into durable, long-term contracted revenue. Nebius signed four AI cloud contracts in the second quarter, each with an average total value exceeding $1 billion. Customers include Reflection and Cohere. Management says annual contract values per megawatt range between $20 million and $25 million — a figure that suggests the newly built capacity can be monetized profitably if utilization holds up.

The company also gained a strategic endorsement in August when Nvidia disclosed a passive stake of 9.3 percent in Nebius Group. That relationship could prove valuable in the competition for GPU supply, though its durability remains an open question.

Should investors sell immediately? Or is it worth buying Nebius?

The Bearish Counterweight

The central risk is the capital intensity itself. Investing $5.66 billion in a single quarter presupposes that the resulting capacity will actually be filled. If contract momentum lags behind the pace of construction, Nebius could face depreciation charges and margin compression. The stock’s annualized volatility of 159 percent suggests the market is already pricing in considerable uncertainty around this outcome.

There are other cautionary signals. A director sold shares worth several million dollars on August 14 at prices between $277.60 and $278.11 — an isolated transaction, but one that invites scrutiny in a high-valuation environment. The shares currently trade about 25 percent below their 52-week high of €261.00, even as they remain comfortably above the 50-day moving average of €184.78. Over the past twelve months, the stock has more than tripled.

What to Watch Next

The coming week offers the next concrete test. Management is scheduled to appear at Goldman Sachs’ Communacopia + Technology Conference on September 8, followed by Citi’s Global TMT Conference on September 9. Both events should provide early indications of whether demand for compute capacity is keeping pace with Nebius’ aggressive expansion schedule.

The company also made a personnel move in early August, appointing Lindsey Irvine as chief marketing officer — a signal that Nebius is sharpening its institutional investor outreach as it prepares to explain its capital needs to large fund managers.

For now, the combination of raised capacity targets, billion-dollar customer contracts, and a strengthened balance sheet paints a picture of a company backing its ambitions with concrete numbers. Whether the pace of deal-making continues will determine whether this investment phase is remembered as prudent positioning or overreach. The conference appearances next week should offer the first clues.