Will Nebius' $5B CapEx Spike Weigh on Its 2025 EBITDA Targets?

Nebius Group N.V.’s NBIS third-quarter 2025 results not only highlight a business that is moving at a breakneck speed but also reflect dramatically accelerated investments to keep up with AI demand.  As it doubles down on AI infrastructure, NBIS has now set an ambitious $5 billion capital expenditure plan for 2025, up from its earlier guidance of $2 billion. This sharp spike in capex spending is likely to make investors wonder whether profitability will take a hit in the near term.

Nebius noted that capex is strategic as this will enable it to secure critical power, land, sites and hardware to support an accelerated build-out of data centers and GPU deployment going forward and capture business opportunities. It further added that securing land and power accounts for only about 1% of the total spending. Building out data centers represents roughly 18-20%, while the final stage, which involves the deployment of GPUs, represents around 80% of the spending.

Even with this capex surge, Nebius reiterated that it expects to exit 2025 with positive adjusted EBITDA at the group level, though the metric will remain negative for the full year. This signals that the current investments are not expected to disrupt near-term operating performance. NBIS reported an adjusted EBITDA loss of $5.2 million for the third quarter, narrower than the $45.9 million loss in the prior-year quarter.

Financing will play a key role as well. Nebius plans to fund its aggressive expansion through corporate debt, asset-backed financing and equity. Management highlighted that it is in the process of raising asset-backed debt and expects to secure attractive credit terms supported by the creditworthiness of its biggest client. Nebius is also implementing an at-the-market equity program for up to 25 million Class A shares. NBIS added that the program will enable it to access equity funding efficiently. It targets 800 MW to 1 GW of connected power and 2.5 GW of contracted power by the end of 2026.

With demand surging, Nebius’ accelerated investment may be essential to achieve its ambitious ARR targets for 2025 and 2026. But the payoff hinges on execution, continued AI demand and the ability to scale profitably amid increasing competition from the likes of CoreWeave CRWV and tech giants like Microsoft MSFT and Amazon.

Capex Plans for Other Players in the AI Infra Space

CoreWeave, which is another hypergrowth company (revenues surged 134% in the third quarter), slashed its capex guidance for 2025, but there is a catch. Capex for 2025 is estimated to be $12 billion to $14 billion compared with $20 billion to $23 billion projected earlier. However, CRWV expects to recognize the vast amount of capex for the fourth quarter in the first quarter of 2026, following the delay of powered-shell capacity. 2026 capex is expected to be in excess of double that of 2025.

Management added that these investments in the infrastructure platform will reinforce competitiveness and fuel its “continued hyper growth”.

Microsoft’s capex spending is enormous. The company expects the capex growth rate in fiscal 2026 to be higher than that of fiscal 2025.

In the first quarter of fiscal 2026, MSFT spent $34.9 billion in capex, with nearly half allocated to short-lived assets, primarily GPUs and CPUs, to support growing Azure platform demand and first-party applications. The rest of the spend was on long-lived assets supporting monetization for the next 15 years and beyond. This included $11.1 billion in finance leases primarily for big data center sites. These heightened capex commitments will likely keep investors on alert.

NBIS Price Performance, Valuation and Estimates

Shares of Nebius have lost 6% in the past month compared with the Internet – Software and Services industry’s decline of 0.2%.

In terms of price/book, NBIS’ shares are trading at 5.38X, higher than the Internet Software Services industry’s ratio of 3.96X.

The Zacks Consensus Estimate for NBIS’ earnings for 2025 has been revised downwards over the past 60 days.

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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