Nebius Reaffirms $2B Capex for 2025: Enough to Fuel Expansion?

Nebius Group N.V. NBIS reaffirmed the $2 billion capital expenditure plan for 2025 on its latest earnings call as it doubles down on capacity expansion to gain market share in the fast-growing AI infrastructure space. The demand for AI infrastructure has exploded in 2025, fueled by the increasing usage of generative AI, machine learning and high-performance computing applications. On its last earnings call, Nebius called the AI infrastructure boom a "once-in-a-generation" opportunity.

NBIS is already experiencing hypergrowth with revenues surging 625% year over year to $105.1 million. AI cloud infrastructure revenues grew more than nine times year over year, driven by demand for copper GPUs and near-peak GPU utilization. Explosive revenue growth demonstrates NBIS’ ability to capture demand in a rapidly expanding AI infrastructure market. 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.

To meet demand, it plans to secure 220 megawatts of connected power (active or ready for GPU deployment). This also includes data centers in New Jersey and Finland. The company is also finalizing two new large-scale greenfield sites in the United States. NBIS plans to build out more than 1 gigawatt of power capacity by 2026, setting the stage for sustained growth into the AI compute boom.

Moreover, it recently closed a deal with Microsoft MSFT for $17.4 billion, which involves NBIS providing dedicated GPU capacity to the latter from the new data center in Vineland, NJ, beginning later this year through 2031. Microsoft could also purchase extra services or capacity as per the terms of the deal, which would raise the total value to around $19.4 billion. NBIS added that cash flow from this deal will be utilized to finance part of the capex associated with the same.

Recent MSFT deal, combined with the AI compute boom, necessitates massive capex to meet demand. On its last earnings call, management pointed to significant cash on hand and an opportunistic approach to raising capital.

After raising $4 billion (highlighted on the last earnings call), NBIS recently announced the closing of its public offering of Class A ordinary shares and private offering of convertible senior notes, which have gross proceeds of nearly $4.2 billion as of Sept. 15, 2025, to fund capex associated with delivering AI infrastructure to Microsoft. In addition to the MSFT deal, it plans to use some of the proceeds from financing to accelerate business growth, including the purchase of additional computing power and hardware, and well-located land plots for expansion of its data center footprint and for general corporate purposes.

Nonetheless, Nebius’ capex spend appears prudent, but its payoff hinges on execution, continued AI demand and the ability to scale profitably.

Capex Plans of NBIS’ Competitors

The fast-growing AI market is also becoming highly competitive as companies scramble to gain a larger share. From behemoths like Amazon and Microsoft, as well as upcoming players like CoreWeave CRWV, these companies are deploying heavy capex for capacity expansion.

CoreWeave, which is another hypergrowth company (revenues surged 207% in the second quarter), has reaffirmed its capex guidance at $20-$23 billion for 2025. For the second quarter, capex was $2.9 billion, an increase of $1 billion from the last quarter, and it expects capex for the third quarter to be between $2.9 billion and $3.4 billion. The company uses a success-based model, entering capex programs only after securing multi-year customer contracts that cover investment costs within the contract terms, helping it to sensibly scale the debt structure.

Nonetheless, on the last earnings call, CRWV noted that it raised a staggering $25 billion in debt and equity since 2024. Interest expense surged to $267 million compared with $67 million a year ago. For the third quarter, it expects interest expenses to be between $350 million and $390 million, owing to high leverage. Higher interest expenses can exert pressure on the adjusted net income and potentially affect free cash flow generation and undermine near-term profitability.

Microsoft is a giant in this space, with Azure Cloud being one of the dominant forces in the AI-cloud infrastructure space. The company is allocating significant capital expenditures to scale its AI infrastructure. MSFT is planning more than $30 billion in capital expenditures for the first quarter of fiscal 2026 alone. It had a backlog of $368 billion at the end of the fiscal fourth quarter of 2025.

In the fourth quarter of fiscal 2025, the company spent $24.2 billion on capex. It paid $17.1 billion for PP&E. MSFT highlighted that nearly half of the cloud and AI-related spend was on long-lived assets that will support monetization over the next 15 years and more. The remainder focused on servers (CPUs and GPUs) to fulfill rising AI demand.

NBIS Price Performance, Valuation and Estimates

Shares of Nebius gained 40% in the past month compared with the Internet – Software and Services industry’s growth of 16.4%.

In terms of price/book, NBIS’ shares are trading at 5.88X, higher than the Internet Software Services industry’s ratio of 4.54X.

The Zacks Consensus Estimate for NBIS’ earnings for 2025 has been unchanged over the past 30 days.

NBIS currently carries a Zacks Rank #3 (Hold). 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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