Nebius Group dropped its third-quarter results before the open this morning, 48 hours after CoreWeave’s beat-and-raise sent that stock up roughly 16% and lifted NBIS nearly 13% in sympathy. The question that matters for Nebius specifically is narrower than a headline revenue beat: does the $7 billion to $9 billion year-end annualized run-rate target represent contracted, deployable capacity, or is it still a function of power megawatts that have yet to come online?
The arithmetic is demanding. Nebius exited June at an annualized run-rate revenue (ARR) of $3.0 billion, up 598% year over year and 56% from the $1.9 billion reported at the end of March. To hit even the low end of its year-end target, it needs to roughly 2.3x that run rate in six months. Truist entered today expecting ARR to exceed $4.8 billion this quarter, with Wall Street’s consensus sitting at revenue of $907.17 million and an EPS loss of $0.63.
The Business Behind the Numbers
Nebius is building a full-stack AI cloud platform, from data and model training to production deployment, serving startups and enterprises globally. Its AI cloud unit drove essentially all group revenue in Q2, with gross margin of roughly 77% (excluding depreciation and amortization) and group adjusted EBITDA reaching $236.2 million, a margin of about 41%. The managed-inference product, called Token Factory, had crossed $100 million in ARR against a $250 million year-end target. That layer carries lighter capital requirements than bare-metal GPU rental, which matters when capex is running at this scale.
The company enters today’s report targeting $3 billion to $3.4 billion in 2026 revenue, $7 billion to $9 billion in year-end ARR, and 800 megawatts to 1 gigawatt of connected power. Bank of America analyst Tal Liani expected Nebius to end Q3 with 675 megawatts of connected power and roughly 525 megawatts active. The gap between connected and active power is where revenue slips: hardware that is on-site but not generating customer workloads earns nothing while the depreciation clock runs.
The Spending Plan and How It Gets Funded
The more consequential number on today’s call is not EPS. Nebius has guided to $7 billion to $9 billion of annualized run-rate revenue by year-end alongside $20 billion to $25 billion of capital expenditure, against $3.0 billion to $3.4 billion of group revenue this year. Nebius ended Q2 with roughly $8.0 billion in cash after spending about $8.13 billion in capex during the first half, implying another $11.9 billion to $16.9 billion of spending in the second half to stay inside guidance.
The funding architecture is layered and worth understanding. Management noted that nearly 70% of second-quarter deals included upfront customer prepayments, which are expected to provide more than $9 billion of funding in 2026, with terms covering approximately 50% to 60% of associated capex. Beyond prepayments, the company completed roughly $5.75 billion in convertible debt financing since the end of Q2 and secured a $775 million asset-backed facility. Then in October came the larger move: Nebius entered a $3.5 billion senior secured facility provided by Citi, with a 364-day maturity and initial interest at Term SOFR plus 2.75%.
That one-year term is the pressure point, because it means Nebius must refinance into a market that recently punished neocloud credit. CEO Arkady Volozh addressed the pressure directly: he acknowledged that neocloud companies are finding it harder to raise debt, but said Nebius had sufficient funding to deliver its planned capacity expansion.
Bull Case, Bear Case
The bull argument is structural. Nebius can convert operational infrastructure assets into growth capital, with more than $40 billion of contracted revenue from investment-grade customers such as Microsoft and Meta already in place. CoreWeave’s just-reported quarter showed revenue of $3.66 billion, up 168% year over year, with the company noting that demand for AI infrastructure remains well ahead of supply. If that read-through holds for Nebius, Q3 contracted volumes should convert cleanly into revenue.
The bear case centers on three things: a 364-day Citi bridge that needs refinancing in a volatile credit market; depreciation loads from a capex cycle running at nearly 10x revenue; and the Microsoft-related concern that surfaced in early November, when Bloomberg reported that Microsoft had tightened oversight of some neocloud data center projects, including Nebius. Q2 brought four deals averaging over $1 billion each, including a reported Meta deal of $12 billion to $15 billion. New large contracts, or customer-concentration commentary, would directly address the Microsoft worry.
What Investors Should Watch Next
Three signals matter beyond the revenue line. First, the Q3 exit ARR: Truist’s $4.8 billion bar is the minimum credibility threshold; anything above $5 billion meaningfully narrows the gap to year-end guidance. Second, the connected power figure against BofA’s 675-megawatt estimate, because the revenue path is physically constrained by what is plugged in and active. Third, any update to the $20 billion to $25 billion capex range or formal 2027 guidance: the more interesting question for the second half is whether Nebius provides any formal capex guidance for 2027.
Nebius enters this morning with its shares still roughly 28% below their one-month peak, the CoreWeave tailwind behind it, and a financing plan whose credibility depends on whether today’s ARR number shows the ramp is real. Revenue beating a $907 million bar is the floor, not the investment thesis.
