Thesis. The best-financed and only genuinely differentiated neocloud — $8B cash, 41% adjusted EBITDA margin, explicit 2026 guidance, its own software stack, and ~$46B of Microsoft and Meta contracts including a Meta commitment to take up to $15B of additional available capacity.
Reviewed 19 Sep 2026, after Q2 2026 results on 12 Aug. Next review after Q3 2026 earnings on 12 Nov 2026.
What it does
Nebius builds and runs AI cloud infrastructure, assembled from the former Yandex international business. It owns its datacentres and — uniquely in this category — builds its own cloud software, storage, networking and workload management rather than purely reselling NVIDIA hardware wrapped in a billing system.
Two terms carry the story. ARR (annualised run rate) takes the newest month's revenue and projects it forward as if permanent; it is not a GAAP measure and it leads reported revenue by a wide margin. Prepayments are cash customers hand over before delivery — roughly 70% of Nebius deals carry them, which is how a company with $5.7B of quarterly capex also produced $2.3B of operating cash flow.
Owning the software layer is the difference between earning a margin and earning a spread on rented hardware.
Bull case
- Q2 2026 revenue $582M, +454% YoY and +46% QoQ. Nebius AI revenue $575M (+514%), 98% of the total
- ARR reached $3B, +598% YoY and +58% sequentially from $1.9B
- Adjusted EBITDA $236M at a 41% margin, up from 32% in Q1 and from a −$21M loss a year earlier. The AI segment alone ran at a 50% margin
- Explicit 2026 guidance: revenue $3.0–3.4B, ARR $7–9B, ~40% adjusted EBITDA margin, capex $20–25B. CRWV declined to give annual guidance at all
- ~$46B of contracted and optioned demand from two counterparties. Microsoft $17.4B over five years plus a $2B option ($19.4B). Meta $12B of dedicated capacity from early 2027, plus a commitment to purchase up to $15B of additional available capacity across upcoming clusters over five years — up to ~$27B
- $8B cash, $2.3B of operating cash flow in the quarter, ~70% of deals prepaid ($9B+ expected annually), a $775M asset-backed facility, and $2.8B raised at an average $224/share
- Contracted power target raised to 5 GW by year-end. Landmark deals pricing at $20–25M per megawatt
- A $2B NVIDIA investment alongside a >$1B multi-year agreement with Reflection AI
Bear case
- The quality is priced. Up sharply over the past year on exactly this record — very little room for disappointment, and the ATM issuance at $224 tells you management agreed the price was generous
- Capex $5.7B in a single quarter, $20–25B guided for the year. Against $8B of cash, this business runs on continuous financing and customer prepayments, not on retained earnings
- Two customers dominate the contracted book. Microsoft and Meta are ~$46B of the ~$46B; Reflection AI is the only other named name of scale
- ARR is not a GAAP measure. $3B of ARR against $582M of quarterly revenue is the same signed-versus-realised gap seen across this category
- Still a bottleneck buyer — buys GPUs from NVIDIA and power from utilities, then rents the combination into a competitive market, with margin squeezed between two costs it does not control
- GPU depreciation assumptions undisclosed, as across the whole category
- European geopolitical legacy from the Yandex separation
- Competes directly with hyperscalers who are simultaneously its two largest customers
Major customers
- Microsoft — $17.4B over five years for dedicated GPU capacity, plus a $2B option ($19.4B potential). The anchor relationship, signed September 2025, starting at Vineland, New Jersey
- Meta — $12B of dedicated capacity from early 2027 on NVIDIA Vera Rubin, plus a commitment to take up to $15B of additional available capacity across upcoming clusters over five years (~$27B potential). Expanded in March 2026 from an original $3B December deal
- Reflection AI — >$1B multi-year agreement
- NVIDIA — supplier and investor ($2B)
- AI labs, model developers and enterprises buying GPU capacity and managed services
Read-through. Nebius competes with CRWV, IREN and WYFI for the same customers, and its buildout drives orders for VRT and the power names. Its disclosed $20–25M per megawatt pricing is the cleanest public benchmark for what contracted AI capacity is worth, and it is the number to hold every other name's lease announcements against. Nebius selected BE fuel cells for its 300 MW Vineland, New Jersey site — disclosed on its own earnings call — which makes neocloud capacity announcements a leading indicator for behind-the-meter power orders. The Meta relationship also ties this name to META's own capex decisions more tightly than the ticker suggests.
What would change the view
- Whether ARR converts to GAAP revenue at the guided pace — $3B ARR against $3.0–3.4B of full-year revenue guidance is the tension to watch
- Adjusted EBITDA margin holding near 40% as capex scales to $20–25B
- Progress toward $7–9B ARR by end-2026 and 5 GW of contracted power
- Whether Meta exercises the $15B additional-capacity commitment, and whether Microsoft takes its $2B option
- Financing mix — how much of the capex comes from prepayments versus further equity issuance and debt
- Assumed GPU useful life, undisclosed across the category
- Customer diversification beyond Microsoft and Meta
Update log
19 Sep 2026 — Converted to the standard template and brought current through Q2 2026; the page had been written the day before the print. Material correction: the page previously described a Microsoft obligation to purchase up to $15B of capacity "if Nebius cannot sell it elsewhere." That is wrong on both counts — the $15B additional-capacity commitment is Meta's, not Microsoft's, and it is a commitment to purchase available capacity across upcoming clusters, not a backstop triggered by Nebius failing to sell. Microsoft's deal is $17.4B plus a $2B option. Corrected throughout, and the "downside backstop no peer has" framing removed. Backlog, Dominant Risk and Thesis properties updated.
12 Aug 2026 — Q2 2026 reported. Revenue $582M (+454%), ARR $3B (+598%), adjusted EBITDA $236M at 41% margin, capex $5.7B, cash $8B, operating cash flow $2.3B. Contracted power target raised to 5 GW by year-end; capacity pricing $20–25M/MW. FY26 guidance reaffirmed at $3.0–3.4B revenue, $7–9B ARR, ~40% margin, $20–25B capex.
Mar 2026 — Meta agreement expanded to $12B of dedicated capacity plus up to $15B of additional capacity (~$27B over five years), from the original $3B December deal. NVIDIA invested $2B.
Sep 2025 — Microsoft agreement signed, $17.4B over five years plus a $2B option, beginning at Vineland, New Jersey.
Research and education only — not investment advice.
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