Nebius shares jump 34% on continued AI infrastructure demand

Shares of Nebius Group NV surged 34% following its release of robust second-quarter earnings that surpassed all projections. The Netherlands-based firm specializes in a cloud platform tailored for AI operations, alongside two additional business units: Avride, focusing on autonomous driving software, and TripleTen, providing AI programming courses.

Revenue for the period ballooned 454% year-over-year, reaching $582.3 million, exceeding LSEG's consensus estimate by $10 million. This surge was largely propelled by sizable deals with major clients, including four data center agreements averaging over $1 billion each, a contract with Cohere Inc., a language model startup, and three others with Reflection AI Inc., a neocloud operator, and a trading firm.

Nebius had previously secured cloud arrangements with Meta Platforms Inc. and Microsoft Corp. valued at up to $46.4 billion. The company is aggressively expanding its infrastructure, recently unveiling plans for a Missouri data center campus with potential capacity of 1.2 gigawatts, and a 310-megawatt facility in Finland. Nebius offers infrastructure and cloud services aimed at accelerating AI projects, including managed PostgreSQL and MLFlow, an open-source LLM debugging tool.

In June, Nebius introduced an AI agent automating virtual machine provisioning. The company's capital expenditures surged to $5.7 billion in the second quarter, surpassing forecasts of $4.7 billion. Analysts noted that this expenditure increase wouldn't negatively impact Nebius' stock due to the expected return within one year and 10 months.

Capital expenditures' payback period is projected to be approximately one year and 10 months. Furthermore, Nebius finances over half of its expenses through customer prepayments. Despite the rise in infrastructure costs, the firm improved its profitability in the quarter, halting a $33.2 million loss from the previous year to an adjusted loss of 12 cents per share, significantly below the anticipated 67 cents.

Nebius has raised its 2026 contracted power target to 5 gigawatts, with plans to add over 1 gigawatt annually from 2027.