Nebius Surges 34% Post Q2: Will $40B Backlog Power Further Growth?

Annualized run-rate revenues reached $3 billion, up 58% from $1.9 billion in the first quarter of 2026.

More importantly, profitability improved alongside growth. Adjusted EBITDA was $236 million in contrast to a loss of $21 million in the prior year quarter. Adjusted EBITDA margin expanded to 41% from 32% in the previous quarter. Nebius AI business delivered a 50% adjusted EBITDA margin.

Nebius reaffirmed its 2026 outlook for revenues of $3-$3.4 billion and annualized run-rate revenues of $7-$9 billion.

However, the highlight was the company’s expanding committed backlog, which stood at more than $40 billion, bolstering multi-year visibility. Management added that it closed four “landmark” deals averaging $1 billion each. These deals are significant, represent yields of $20-$25 million per megawatt and have upfront payments covering 50-60% of the associated capex spend.

Nebius mentioned it is deliberately not selling the entire 2027 capacity on such terms to retain some capacity for shorter-term and immediate client needs.

The company also raised its year-end contracted power target to 5 gigawatts and plans to deploy more than 1 gigawatt of new capacity in 2027. With committed demand already supporting its capacity investments, execution on infrastructure deployment and backlog conversion should remain central to Nebius' 2027 growth story.

Challenges for NBIS remain significant amid intense competition from rivals such as pure-play CoreWeave CRWV and tech behemoths like Microsoft MSFT, Amazon and others, which are also aggressively ramping up capacity.

Mapping Competitive Terrain

CoreWeave is another rapidly growing AI infrastructure company. Its second-quarter revenues of $2.6 billion jumped 112% year over year, while revenue backlog reached $104.2 billion. The backlog figure does not include more than $25 billion of net new customer commitments secured in the early third quarter.

To support these long-term commitments, CoreWeave is rapidly expanding its infrastructure footprint. At second-quarter end, it had 1.5 gigawatts of active power, after adding nearly 500 megawatts during the quarter. Contracted power was 4.2 gigawatts, offering visibility toward the company’s goal of at least 8 gigawatts by 2030.

Competition from hyperscalers remains formidable given their massive scale, cloud ecosystem and aggressive capacity expansion. Microsoft’s revenues for the fourth quarter of fiscal 2026 reached $90 billion, up 18% year over year. Azure and other cloud services revenues rose 43% year over year, while management said customer demand continues to exceed available capacity. Commercial remaining performance obligations (“RPO” rose 84% to $678 billion. Excluding OpenAI, RPO still increased 25%. The weighted-average duration for RPO is 2.3 years, with 30% expected to be recognized as revenue over the next 12 months.

Microsoft added 31 data centers across five continents during the quarter and another gigawatt of capacity, while remaining on track to nearly double overall capacity within two years.

NBIS Price Performance, Valuation and Estimates

Shares of Nebius gained 33.6% in the past month compared with the Internet – Software and Services industry’s growth of 10%.

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In terms of price/book, NBIS’ shares are trading at 9.06X, up from the Internet Software Services industry’s ratio of 4.21X.

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The Zacks Consensus Estimate for NBIS’ earnings for 2026 has been revised downward over the past 60 days.

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NBIS currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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