Nebius AI Cloud Revenue Soars Amidst Strong Market Demand

Nebius Group has reported a remarkable second quarter for fiscal year 2026, with its specialized AI cloud infrastructure business experiencing explosive growth. The Amsterdam-based firm announced total revenue of $582.3 million, a staggering 454% increase year-over-year. The core AI cloud segment, which rents out GPU capacity and a comprehensive software stack to AI developers and enterprises, saw its revenue skyrocket by 514% to $574.9 million. This performance significantly outpaced analyst expectations, which had projected total revenue closer to $557 million, according to Bloomberg data. In reaction to the robust results, Nebius's Nasdaq-listed stock (NBIS) surged over 15%, extending its year-to-date gains to an impressive 131%.

The company, which emerged from the international holdings of the former Yandex N.V. following its restructuring in 2024, is carving out a distinct niche in the competitive AI infrastructure market. Led by founder and CEO Arkady Volozh, Nebius positions itself as a 'neocloud' provider, focusing exclusively on the demanding computational needs of artificial intelligence workloads. This strategic focus places it in direct competition with established hyperscalers like AWS, Microsoft Azure, and Google Cloud, as well as specialized AI cloud providers such as CoreWeave, Crusoe, and Lambda. While the AI cloud business constitutes approximately 98% of its revenue, Nebius also holds interests in robotics firm Avride, edtech provider TripleTen, and minority stakes in data analytics firm Toloka and database company ClickHouse, the latter valued at around $15 billion in a recent funding round.

Beyond top-line growth, Nebius demonstrated impressive margin expansion within its AI cloud operations. Adjusted EBITDA for the segment reached $285.7 million, translating to a healthy margin of 49.7%. This marks a significant improvement from 45% in the prior quarter and 24% in Q4 2025, underscoring the increasing profitability of its specialized infrastructure. On a group level, adjusted EBITDA swung to a positive $236.2 million, a dramatic turnaround from a $21 million loss in the same period last year. The company's annualized run-rate revenue (ARR) now stands at an estimated $3.0 billion, up from $1.9 billion at the close of the first quarter.

This rapid expansion is fueled by substantial capital investment. In the second quarter alone, Nebius deployed approximately $5.7 billion towards GPUs, associated hardware, and data center infrastructure development. The company ended the quarter with a strong liquidity position, holding roughly $8 billion in cash. Funding for these aggressive build-outs has been secured through multiple avenues, including an at-the-market equity program that generated approximately $2.8 billion in gross proceeds. Furthermore, Nebius recently closed its inaugural secured debt financing facility totaling $775 million, backed by its deployed GPU assets and contracted revenue streams from an investment-grade client. Looking ahead, the company anticipates over $9 billion in customer prepayments for the full year, with total customer commitments exceeding $40 billion.

Nebius highlighted the successful closure of four significant contracts during the quarter, each with an average total value exceeding $1 billion. The company reported strong pricing power, achieving contract values of $20-25 million per megawatt and increasing pricing for older GPU generations by over 30% compared to the previous quarter. Notably, approximately 70% of these new deals included substantial prepayments, covering 50-60% of the associated capital expenditures. This strategic approach has significantly reduced the expected payback period for new deployments to an estimated one year and ten months, down from a previous range of two to three years. Key clients include AI startup Reflection, Canadian AI firm Cohere, an unnamed U.S. AI lab, and a major U.S. quantitative trading firm. The company also confirmed the full delivery of capacity commitments to Microsoft and is progressing on a second agreement with Meta, slated for early 2027.

To further mitigate capital intensity and accelerate growth, Nebius is introducing an "asset-light partnership model." Under this initiative, partners will finance and construct data centers, which will then operate using Nebius's full software stack. This division of labor allows partners to contribute land, buildings, and hardware, while Nebius provides its cloud platform, architectural designs, and global sales organization. This model aims to generate high-margin revenue for Nebius without requiring upfront capital expenditure for physical infrastructure, addressing industry bottlenecks related to capital and available capacity. The company is also expanding its physical footprint, adding new sites in the UK, Estonia, and Finland, and plans to bring over one gigawatt of capacity online annually from 2027 onwards, raising its year-end contracted power target to 5 gigawatts.