Can Nebius Reach its 2026 ARR Target Amid Soaring AI Demand?

Nebius Group N.V. NBIS is rapidly positioning itself as a major force in the global AI infrastructure market, setting an ambitious target of achieving an annualized run rate (ARR) of $7–$9 billion by the end of 2026. Nebius is on track to achieve its ARR guidance of $900 million to $1.1 billion by the end of 2025, laying the foundation for substantial growth in 2026 and beyond.Nebius’ focus on strengthening its core AI cloud business remains strong. The company continues to make solid progress with AI-native startups like Cursor and Black Forest Labs, viewing these partnerships as key to building its long-term growth engine. The company’s recent multi-billion-dollar partnerships with Microsoft and Meta, worth up to $19.4 billion and $3 billion, respectively, signal growing trust from major technology players. The company’s deals with Microsoft and Meta are expected to begin contributing late in the quarter, with the majority of related revenue ramping up throughout 2026.In 2026, Nebius plans to continue expanding its existing data centers in the U.K., Israel and New Jersey, while bringing new facilities in the United States and Europe online during the first half of the year. The company is also securing several new large sites, each capable of delivering hundreds of megawatts, with some scheduled to go live before the end of 2026. The company is rapidly expanding its infrastructure to meet surging demand, targeting 2.5 gigawatts of contracted power by 2026, up from 1 gigawatt earlier, with 800 megawatts to 1 gigawatt of fully connected capacity expected by the end of next year. With demand skyrocketing, its focus remains on swiftly scaling capacity and building a strong development pipeline to meet needs in 2026 and beyond.At the same time, the company is enhancing its enterprise offerings through the launch of its Aether 3.0 cloud platform and Nebius Token Factory, an inference solution for running open-source models at scale. With a strong product pipeline and accelerating capacity growth, Nebius is positioning itself as a differentiated leader in the global AI cloud market.However, broader macroeconomic uncertainties and heavy capital spending weigh on NBIS’ growth trajectory. Nebius has raised its capital expenditure guidance for 2025 from approximately $2 billion to around $5 billion. Elevated capital expenditure levels pose a risk if revenue growth fails to keep pace with the company’s capital intensity, particularly in an environment where AI demand may fluctuate amid competitive pricing pressures and evolving regulatory frameworks.Moreover, scaling aggressively (multiple data centers in various regions) involves execution risk. Nebius has tightened its full-year group revenue outlook to a range of $500 million to $550 million from the previous guidance of $450 million to $630 million. Although the company continues to expect adjusted EBITDA to turn slightly positive at the group level by year-end 2025, it will remain negative for the full year.Taking a Look at Competitors’ AI InitiativesMicrosoft Corporation MSFT is gaining from its AI strength. Recently, Microsoft announced plans to increase total AI capacity by more than 80% in 2025 and roughly double the total data center footprint over the next two years. The company unveiled Fairwater in Wisconsin as the world's most powerful AI data center, which will scale to two gigawatts and go online next year. Microsoft deployed the world's first large-scale cluster of NVIDIA GB300s and is building a fungible fleet that spans all stages of the AI lifecycle, from pre-training to post-training, synthetic data generation and inference. For the second quarter of fiscal 2026, Microsoft expects total company revenues between $79.5 billion and $80.6 billion, implying growth of 14% to 16%.CoreWeave, Inc.’s CRWV role as the go-to cloud for AI is more solid than ever, as it continues to fuel growth through focus and innovation to enable the next generation of AI. CoreWeave is gaining from major customer wins across AI labs, hyperscalers and enterprises. The company entered into a multi-year deal worth up to approximately $14.2 billion with Meta to power next-generation workloads. It expanded its partnership with OpenAI through a deal of up to $6.5 billion, bringing total commitments to about $22.4 billion.Also, the company is rapidly expanding its data centers to drive growth. The company is rapidly scaling its purpose-built AI infrastructure, adding around 120 megawatts (MW) of active power to reach approximately 590 MW in total and expanding contracted power to 2.9 gigawatts in the third quarter. Also, the company advanced large-scale GB200 deployments in the third quarter and became the first to bring the GB300 to market. CRWV expects full-year 2025 revenues to be between $5.05 billion and $5.15 billion compared with $5.15 billion to $5.35 billion projected earlier.NBIS’ Price Performance, Valuation and EstimatesShares of Nebius have gained 147.6% in the past six months compared with the Internet – Software and Services industry’s growth of 9%. Image Source: Zacks Investment ResearchIn terms of price/book, NBIS’ shares are trading at 5.53X, higher than the Internet Software Services industry’s 4.26X. Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for NBIS’ 2025 earnings has seen a downward revision over the past 60 days. Image Source: Zacks Investment ResearchNBIS currently carries a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report Nebius Group N.V. (NBIS): Free Stock Analysis Report CoreWeave Inc. (CRWV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks