Nebius Group (NASDAQ: NBIS) has
rapidly become one of the market’s most exciting high-growth AI infrastructure
companies after its strong Q4 2025 earnings report. As investors seek
businesses at the heart of artificial intelligence expansion, Nebius stands out
with explosive revenue growth of 500%, rapid scaling, and bullish forward
guidance. Although the stock has rallied significantly over the past year, its
valuation still suggests meaningful long-term upside as global AI adoption and
enterprise demand for advanced compute infrastructure continue accelerating. In
this article we will dive into Nebius recent earnings, stock performance &
valuation, growth potential, and the risks we should consider.
About Nebius Group
Nebius was formed in 2024 as an
AI-focused cloud infrastructure provider following a strategic restructuring of
international technology assets and began trading on NASDAQ in October 2024.
The company operates high-performance, GPU-powered data centers designed for
large-scale machine learning workloads, including AI training and inference.
Unlike traditional hyperscalers, Nebius concentrates specifically on AI-native
infrastructure, serving startups, enterprises, and research institutions
needing scalable, cost-efficient compute solutions.
Nebius Financial Performance
Nebius delivered exceptional
revenue growth in Q4 2025, with quarterly revenue reaching $227.7 million,
compared to $37.9 million in Q4 2024, representing a 500.79% year-over-year
increase. Despite this explosive top-line expansion, quarterly EPS came in at
-$0.99, compared to -$0.56 in the same quarter last year, reflecting a 76.79%
decrease, primarily due to continued investment in infrastructure and scaling
operations. On a trailing twelve months (TTM) basis, revenue for Q4 2025
totaled $529.8 million, up from $117.5 million in Q4 2024, marking a 350.89%
increase. Importantly, TTM EPS improved significantly to $0.40, compared to
-$2.28 a year earlier, representing a 117.54% improvement primarily due to sale
of investments.
The company maintains solid
profitability metrics, with a Gross profit margin of 68.63% and a Net profit
margin of 19.2%. Return on Assets stands at 0.82% and Return on Equity is 2.2%,
while carries a debt-to-equity ratio of 1.06, indicating moderate leverage to
support growth.
Over the past five years, Nebius,
previously known as Yandex, divested its Yandex business, rebranded as Nebius,
and fully pivoted to AI infrastructure. Revenue is lower than before but is
projected to grow rapidly in 2026 as the company scales.
Nebius Fiscal 2026 Financial
Forecast
Looking ahead, analysts forecast
2026 revenue of $3.38 billion, representing a projected 537.51% increase from
2025 revenue of $529.8 million, highlighting expectations for continued
hypergrowth. However, analysts also estimate Non-GAAP EPS of -$2.26 for 2026, a
37.5% decrease from 2025 EPS of -$1.40. Wall Street analysts currently assign a
Buy rating, with an average price target of $145.10, implying a 48.79%
potential upside, while the highest price target of $211 suggests a possible
116.36% upside from current levels.
NBIS Stock Price Performance
and Valuation
At the time this article was
written Nebius stock was trading at $97.52 per share, the stock has gained
102.87% in the past one year, significantly outperforming the S&P 500,
which rose 11.6% during the same period. Since its public listing in October
2024, the stock has surged 398.3%, once again dramatically outperforming the
S&P 500’s 17.8% gain over that timeframe. This level of outperformance
highlights strong investor confidence in the company’s AI-driven growth story
and long-term expansion potential.
From a valuation perspective,
Nebius currently trades at a price-to-sales (P/S) ratio of 46.57 on a trailing
twelve months (TTM) basis, which appears high at first glance. However, the
forward P/S ratio drops significantly to 7.31, reflecting analysts expectations
of substantial revenue expansion in the coming year. The company’s Non-GAAP P/E
(TTM) ratio stands at 242.62, while the Non-GAAP forward P/E is not available, because
of projected near-term loss as the company continues investing heavily in
growth.
Despite the seemingly high
trailing multiples, the sharp compression in the forward P/S ratio suggests
that revenue growth is expected to rapidly scale into the current valuation.
Given the company’s triple-digit revenue growth rates and forecasted multi-billion-dollar
revenue trajectory, the stock can still be considered attractive for long-term
investors who believe in the structural expansion of AI infrastructure demand.
Nebius Growth Potential
Nebius growth prospect remains
strong, driven by several factors.
- Explosive Revenue Growth and
ARR Momentum in the Core AI Cloud Business
Nebius delivered explosive growth in Q4 2025, with its core AI cloud business accounting for 94% of group revenue and surging to $214.2 million, up 802% year over year and 63% sequentially, driven by peak utilization and fully sold-out capacity amid strong global AI compute demand. Full-year revenue reached $529.8 million, increasing 479% YoY. Core Annual recurring revenue (ARR) climbed to $1.25 billion by December 31, 2025, more than doubling from $551 million at the end of Q3 and exceeding guidance of $900 million to $1.1 billion.
The rapid expansion highlights Nebius’s growing share in AI infrastructure, supported by enterprise-grade security and flexibility. Multi-year contracts with hyperscalers and AI-native startups strengthen visibility, while new capacity additions underpin management’s ambitious 2026 ARR target of $7–9 billion and a path toward multi-billion-dollar annual revenue. - Aggressive Infrastructure
Capacity Expansion and Power Buildout
Nebius ended 2025 with roughly 170 MW of active power capacity, exceeding its initial 100 MW goal and supporting record Q4 utilization. The company aims to scale to 800 MW–1 GW of connected power by December 2026, backed by over 2 GW already contracted and expected to surpass 3 GW by year-end, largely from owned data centers. Expansion includes nine new large-scale sites across the U.S. and EMEA, bringing its footprint to 16 global locations.
Q4 capital expenditures reached $2.1 billion, primarily invested in advanced AI systems, positioning Nebius to meet surging demand. This disciplined buildout addresses key industry constraints in power and GPU supply while enhancing long-term unit economics. As AI compute demand continues to exceed supply, the expansion strengthens revenue potential and reinforces Nebius’s position as a leading independent AI cloud provider. - Robust Customer Backlog,
Prepayments, and Demand Visibility
Nebius entered 2026 with exceptional revenue visibility, supported by approximately $1.58 billion in deferred revenue at year-end 2025, including $275.5 million current and $1.302 billion non-current, largely driven by multi-year customer prepayments. This structure generated a transformative $834 million in positive operating cash flow during Q4, strengthening its $3.7 billion cash balance despite significant capital expenditures. Capacity was fully sold out, with future expansions largely pre-committed, including scheduled deliveries to Microsoft in November 2025 and completed tranches now servicing Meta.
Its diversified pipeline spans AI startups, enterprises, and industries such as healthcare, robotics, media, and financial services, limiting concentration risk. The sizable backlog reduces execution uncertainty while funding organic growth with minimal dilution, underpinning the ambitious $7–9 billion ARR target for year-end 2026 and signaling sustained outperformance potential.
Risks to Consider
While Nebius looks like an
attractive stock, we should be mindful of potential risks.
- High Capital Intensity and Massive
Capex Requirements
Nebius requires massive capital expenditures on data centers, GPUs, power infrastructure, and rapid expansion, with recent guidance indicating $16–20 billion in capex for a single year. Given its limited cash reserves relative to these needs, the company faces significant funding risks, including potential share dilution from equity raises, increased debt, or heavy reliance on volatile customer prepayments that do not reliably reflect sustainable cash flows. - Execution and Delay Risks in Scaling
Infrastructure
Nebius's growth depends on swiftly scaling power capacity from hundreds of megawatts to gigawatt levels, securing reliable energy and grid connections, and meeting aggressive buildout schedules. Any delays in data center deployment, energy shortages, or operational setbacks could jeopardize ambitious ARR and revenue targets, undermine investor confidence, and spark significant stock price declines as evidenced by past periods of weakness linked to execution doubts. - Profitability Challenges and Ongoing
Losses
Nebius remains unprofitable, with substantial losses likely to continue or even increase during its aggressive expansion phase. These stem from high depreciation, ongoing R&D, sales and marketing expenses, and massive capital expenditures. The path to positive free cash flow and sustainable margins is still unproven at scale, introducing uncertainty about long-term returns, particularly if AI enthusiasm fades or demand weakens.
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Conclusion
Nebius has demonstrated extraordinary revenue acceleration, improving profitability trends, and strong forward growth expectations following its Q4 2025 results. While short-term earnings may fluctuate due to aggressive reinvestment, the company’s expanding AI infrastructure footprint and projected multi-billion-dollar revenue outlook support long-term optimism. Despite premium valuation metrics, rapid forward revenue scaling and strong analyst upside targets suggest Nebius remains an attractive high-growth opportunity for investors willing to embrace volatility.
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