Can Nebius Reach $1.1B ARR and $630M Revenue Amid AI Boom?

Nebius Group N.V. NBIS has set ambitious 2025 goals of reaching $1.1 billion in annualized run-rate revenue (ARR) and $630 million in total group revenues. In the second quarter of 2025, the company delivered robust performance with $105.1 million in revenues, up 625% year over year and more than double the prior quarter, largely driven by the core artificial intelligence (AI) infrastructure business.

Global demand for AI-specific infrastructure is booming, with hyperscalers, startups and enterprises increasing GPU investments. In the second quarter, the company’s AI cloud infrastructure revenues soared, driven by robust customer demand for its copper GPUs and the platform operating at near-peak utilization.

Nebius’ core business is an AI cloud platform designed for intensive workloads, powered by in-house developed software and hardware with R&D hubs across Europe, North America and Israel. Nebius provides AI builders with the compute power, storage, managed services and tools required to build, fine-tune and deploy their models. The Group also operates businesses under distinct brands, including Avride and TripleTen.

Management reported that in the second quarter, the core unit achieved positive adjusted EBITDA ahead of schedule. The company had sold out its entire supply of previous-generation hoppers and chose to wait for the launch of the new generation of GPUs. With the new Blackwell GPUs entering the market at scale and its data center capacity expanding significantly in parallel, the company expects a substantial increase in sales by year-end. As a result, NBIS raised its year-end ARR guidance from the prior range of $700 million–$1 billion to $900 million–$1.1 billion.

The company is rapidly expanding, aiming for 220 MW of active or GPU-ready power by year-end, including data centers in New Jersey and Finland. It is also finalizing two major U.S. greenfield sites and targeting more than 1 GW of power by 2026 to capitalize on industry growth.

Nebius enhanced its cloud software to support growing capacity and large-scale clusters, expanded its customer base with major tech firms like Cloudflare, Prosus and Shopify, and maintained its lead as the go-to cloud provider for native AI startups.

The company raised more than $4 billion in capital so far and has a strong balance sheet, with access to more funds through its other businesses and investments like Avride, ClickHouse and Toloka. AI compute demand is growing fast, and the company is expanding capacity to boost growth in 2026 and beyond.

However, increasing market competition and macroeconomic uncertainties may adversely impact NBIS’ growth trajectory. Nebius competes with technology giants like Microsoft Corporation MSFT and CoreWeave, Inc. CRWV.

Taking a Look at MSFT & TTD

Microsoft capitalizes on AI business momentum and Copilot adoption alongside accelerating Azure cloud infrastructure expansion. Microsoft's early and aggressive investments in AI, particularly through its partnership with OpenAI, have positioned Azure as the preferred platform for AI workloads, attracting both startups and enterprises seeking to leverage cutting-edge AI capabilities. The company projected fiscal first-quarter 2026 revenues between $74.7 billion and $75.8 billion. Azure revenues are expected to grow approximately 37% at constant currency in the upcoming quarter, indicating sustained momentum despite the massive scale already achieved.

CoreWeave is an AI-focused hyperscaler company, and its cloud platform has been designed to scale, support and accelerate GenAI. The company expects revenues for 2025 to be in the range of $4.9 billion to $5.1 billion. CoreWeave anticipates capital expenditures of $20 billion to $23 billion, reflecting accelerated investment in its infrastructure to meet growing customer demand. This guidance incorporates the impact of several key developments, including the OpenAI contract signed in March, a $4 billion expansion agreement with a major AI enterprise and the integration of Weights & Biases into its platform strategy. At present, it has a network of 33 purpose-built AI-data centers across the United States and Europe, supported by 420 megawatts of active power. The company is scheduled to report second-quarter 2025 results on Aug. 12, after market close. The Zacks Consensus Estimate for loss and revenues is pegged at 23 cents per share and $1.08 billion, respectively.

NBIS Price Performance and Valuation

Shares of Nebius have surged 642.1% year to date compared with the Internet – Software and Services industry’s growth of 41.8%.

In terms of price/book, NBIS’ shares are trading at 4.3X, up from the Internet Software Services industry’s ratio of 4.18.

NBIS currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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