Will Nebius Achieve its $1B ARR and Up to $700M Revenue Targets?

Nebius Group N.V. NBIS has captured investor attention with its explosive growth and ambitious 2025 targets of $750 million to $1 billion in annualized run-rate revenue (ARR) and $500–$700 million in total revenues. Following a remarkable 385% year-over-year revenue increase in the first quarter of 2025 and a 700% surge in ARR, the company appears well-positioned to pursue its goals. ARR reached $310 million in April, indicating strong momentum for the second quarter.The company is gaining from solid growth in its core artificial intelligence (AI) business. As organizations increasingly invest in generative AI, Nebius is benefiting from a full-stack approach, offering everything from high-performance GPU cloud infrastructure to Saturn Cloud’s MLOps platform and AI development tools.Backed by a $700 million funding round involving high-profile investors like NVIDIA and Accel in December 2024, Nebius is expanding aggressively in North America and Europe. It aims to leverage this capital to meet customer demand while maintaining flexibility in pricing and cost management. In June 2025, NBIS announced private placement of $1 billion in convertible notes to capitalize on the AI-infrastructure boom and drive-up revenue opportunities in 2026.The company holds a minority stake of approximately 28% in ClickHouse. Recent media reports suggest that a fundraising round is currently in progress, potentially valuing ClickHouse at around $6 billion. The company expects adjusted EBITDA to turn positive in the second half of 2025.Global demand for AI-specific infrastructure is booming, with hyperscalers, startups and enterprises increasing GPU investments. Per IDC’s forecast, AI infrastructure spending is projected to reach $223 billion by 2028, with servers deployed in cloud environments accounting for 82% of the total market and accelerated servers comprising approximately 74% of total market spending.That said, increasing market competition and macroeconomic uncertainties may adversely impact NBIS’ growth trajectory. Nebius competes with technology giants like CoreWeave, Inc. CRWV and Microsoft Corporation MSFT.Taking a Look at CRWV & MSFT Revenue GuidanceCoreWeave 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.Microsoft continues to demonstrate robust growth driven by its cloud and AI investments. Azure’s increased availability in more than 60 announced regions globally is expected to have strengthened Microsoft's competitive position in the cloud computing market, dominated by Amazon’s Amazon Web Services. For fourth-quarter fiscal 2025, management guided total revenues of $73.15–74.25 billion, with Azure/cloud growth projected at 34–35% constant currency. Looking toward future technologies, Microsoft is putting its quantum stack on machines from partners and making real progress on a path to a utility-scale quantum computer with the introduction of Majorana 1, the company's quantum chip unveiled in February. However, elevated operating expenses and Azure investments amid intensifying cloud competition remain concerns for stakeholders.NBIS Price Performance and ValuationShares of Nebius surged 153.3% in the past year compared with the Internet – Software and Services industry’s growth of 39.3%.Image Source: Zacks Investment ResearchIn terms of price/book, NBIS’ shares are trading at 3.58X, down from the Internet Software Services industry’s 4.07X.Image Source: Zacks Investment ResearchNBIS currently carries a Zacks Rank #3 (Hold). 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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