Nebius Group surges 27% as AI infrastructure demand accelerates

Nebius Group shares surged 27.1% on Thursday on higher-than-average volume, extending a rebound driven by Nvidia's expanded 9.3% stake and fresh analyst coverage as AI compute demand outpaces hyperscaler supply.

"Demand for AI compute is growing faster than hyperscalers can currently supply it," Anat Ashkenazi, chief financial officer at Alphabet, said on the company's earnings call, confirming plans to use third-party computing capacity as a bridge while in-house infrastructure comes online.

The move pushed Nebius to roughly $187.77, giving the Schiphol, Netherlands-based company a market capitalization near $55.9 billion. The stock has gained 277.4% over the past 52 weeks and 135.2% year to date, though it remains 37% below its June 22 all-time high of $299.86. Trading volume on Thursday ran above the daily average, according to Zacks data.

The surge comes ahead of Nebius's fiscal Q2 2026 earnings report, with analysts projecting revenue of $582.8 million and a loss of 67 cents per share. The company's five-year, $27 billion agreement with Meta Platforms, including a $12 billion dedicated compute commitment, provides revenue visibility through 2030.

Nvidia Stake and a $27 Billion Meta Contract

Nebius's rebound began after a regulatory filing revealed Nvidia now owns a 9.3% stake in the neocloud company, following a $2 billion strategic investment. The disclosure reinforced Nebius's position as a key partner in AI cloud infrastructure, and the stock has gained 10.76% over the past five trading sessions.

The company's fiscal Q1 2026 results, released in May, showed revenue surging 684% year over year to $399 million, with its core AI business growing 841% to $390 million. Adjusted EBITDA reached $129.5 million, a 32% margin, while the core AI business expanded its adjusted EBITDA margin to 45%. The quarter ended with $9.3 billion in cash and cash equivalents and operating cash flow of $2.26 billion.

Management has contracted power capacity beyond 3.5 GW, targeting more than 4 GW by 2026, supported by a new 1.2 GW Pennsylvania AI factory. The company raised its 2026 capex forecast to $20 billion to $25 billion and projects annualized run-rate revenue between $7 billion and $9 billion in 2026.

Earnings Estimates Point to a Wider Loss

Despite the stock's momentum, the latest trend in earnings estimate revisions may not support continued upside in the near term, according to Zacks. Analysts expect fiscal 2026 loss per share to widen 7.9% year over year to $1.91, before narrowing 63.9% to a loss of 69 cents in fiscal 2027.

Baird initiated coverage of NBIS with an "Outperform" rating and a $250 price target, citing the company's expanding role in AI inference. The consensus rating stands at "Moderate Buy" with a mean price target of $254.92, implying 32.1% upside from current levels. Northland Securities holds the Street-high target of $410, suggesting potential upside of 112.4%.

The neocloud sector has diverged sharply. CoreWeave trades at $71.88, down 40% over the past year, while IREN has gained 104% and Applied Digital 143%. Alphabet's admission that even hyperscalers cannot build capacity fast enough has confirmed the neocloud model, with Nebius and CoreWeave both climbing after the tech giant's earnings call.

Nebius trades at 16.69 times forward sales, a premium to the sector average, reflecting market expectations for continued hypergrowth. With Q2 earnings due shortly and a $99.4 billion backlog across the neocloud sector, the question is whether the stock's 27.1% surge reflects a durable shift in AI infrastructure demand or a short-term move ahead of the report.

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