Nebius Charts Aggressive Expansion Path to Overcome Infrastructure Constraints and Drive Revenue Acceleration

Nebius Group N.V. (NBIS) faces a critical inflection point. While surging demand for AI infrastructure has created a capacity sellout across consecutive quarters, the company must now execute a massive infrastructure buildout to translate that demand into sustainable revenue growth.

The Capacity Squeeze and Strategic Response

Supply constraints have become Nebius’s defining challenge. Third-quarter results revealed that all available capacity was absorbed immediately, a pattern repeating with every new deployment. The root issue: power availability and data center readiness lag behind customer demand. Management disclosed that current capacity limitations are directly restricting revenue potential.

To address this structural bottleneck, Nebius unveiled an ambitious multi-year expansion roadmap. By end of 2026, the company targets contracted power capacity to reach 2.5 GW—more than double the 1 GW guidance issued just months earlier. Critically, 800 MW to 1 GW of that capacity should be operationally connected to data centers by year-end 2026.

Capital Mobilization and Financial Projections

This expansion demands unprecedented capital deployment. Nebius revised 2025 capital expenditure guidance upward to approximately $5 billion from $2 billion, reflecting the urgency to secure power infrastructure, land, facilities, and hardware. The company is tapping multiple funding channels including corporate borrowing, asset-backed securitization, and equity offerings to finance this buildup.

The revenue trajectory underscores the stakes. Nebius adjusted 2025 full-year group revenue guidance to $500–$550 million (revised downward from $450–$630 million), primarily due to timing delays in capacity operationalization. However, the company remains on track for its $900 million to $1.1 billion ARR target by end of 2025, with longer-term ambitions of $7–$9 billion ARR by 2026.

Intensifying Competitive Pressures

Nebius’s capacity-building initiative occurs amid accelerating competition. Tech giants are substantially increasing infrastructure investment. Microsoft announced plans to boost AI capacity by over 80% throughout 2025 and approximately double its total data center footprint over two years. Despite aggressive buildouts, Microsoft expects to remain capacity-constrained through fiscal year-end, with Azure revenue projected at 37% growth. CoreWeave, another infrastructure competitor, is experiencing similar demand-supply imbalances, recently downgrading revenue projections to $5.05–$5.15 billion (from $5.15–$5.35 billion) due to powered-cabinet delivery delays from supply partners.

Market Valuation and Stock Performance

Nebius shares have outperformed substantially, gaining 144.2% over the past six months versus 6.9% growth in the broader Internet Software and Services sector. On a price-to-book basis, NBIS trades at 4.66X compared to the sector’s 39.95X multiple, suggesting relative valuation attractiveness. However, consensus earnings estimates for 2025 have experienced downward revisions over the recent 60-day period, and the stock currently carries a Zacks Rank #4 rating.

The convergence of explosive demand, structural capacity constraints, and required capital intensity creates a pivotal test: whether Nebius can execute its infrastructure expansion fast enough to capture market share before competitors saturate available resources and power availability becomes the industry-wide limiting factor.