Nebius Revenue Keeps Exploding. How Big Can This AI Cloud Get?Nebius Group N.V. Class ANASDAQ:NBISTradingViewApparently, Nebius NBIS did take care of us. Remember Jensen Huang standing onstage at GTC earlier this year repeatedly telling the audience that “Nebius will take care of you”? Well, Nebius NBIS appears to have taken that assignment rather seriously. To wrap up the earnings season, the Nvidia-backed AI cloud company just delivered another monster quarter, sending shares soaring more than 34% as revenue jumped to $582.3 million, up 454% from a year ago and ahead of Wall Street estimates. That follows $399 million in first-quarter revenue, which itself was nearly eight times the year-earlier figure. ☁️ So, What Exactly Is a Neocloud? Nebius belongs to a relatively young group of companies called neoclouds, alongside names such as CoreWeave CRWV (which also did fantastic on earnings). Think cloud computing built specifically for the AI era. Instead of trying to offer everything from email hosting to spreadsheets, these companies concentrate enormous clusters of high-end GPUs and rent that computing power to businesses training and running artificial-intelligence models. And right now, everybody wants that good stuff. Nebius' core AI cloud business generated roughly $575 million of the quarter's total revenue, meaning AI infrastructure has effectively become the engine pulling the entire train. 💰 The Contracts Are Getting Seriously Big Perhaps the most interesting numbers came outside the income statement. Nebius signed four major AI cloud contracts during the quarter with an average total value above $1 billion each. Total contract value was nearly four times higher than during the first quarter, while the value of contracts signed with new customers increased more than ninefold. CEO Arkady Volozh says demand remains strong enough that Nebius could effectively sell all the capacity it expects to have available in 2027 under current commercial terms. Even better for the company's bank account, customer prepayments are expected to exceed $9 billion this year, while total customer commitments have climbed above $40 billion. 📈 Revenue Growth Is Turning Into Profitability Rapid expansion gets considerably more interesting when margins begin moving in the same direction. Nebius generated $236 million in adjusted EBITDA during the quarter, comfortably above expectations around $169 million. EBITDA is a way of looking at operating profitability before interest, taxes and certain accounting expenses enter the picture. The AI cloud operation itself reached an adjusted EBITDA margin of roughly 50%. That's striking because Nebius was still producing negative adjusted EBITDA at the group level just a year ago. The company still reported a GAAP net loss, so the journey from fast-growing infrastructure builder to mature cash machine has plenty of highway remaining. But investors finally have evidence that once Nebius fills its data centers with paying customers, the economics can become attractive. Then comes the truly enormous part. Nebius raised its target for contracted power to 5 gigawatts by the end of 2026, up from its previous target. Beginning in 2027, management plans to deploy more than 1 gigawatt of additional capacity annually. One gigawatt is enough electricity to power roughly 750,000 US homes. 💸 Building the Future Is Expensive Nebius spent roughly $5.7 billion on capital expenditures during the quarter, largely as it builds data centers and shoves in there expensive computing hardware. That creates a familiar AI-stock question: How much money should investors tolerate spending today for revenue expected tomorrow? Alphabet GOOGL investors, specifically, want to know. Nebius has also raised fresh equity along the way, which can dilute existing shareholders by increasing the number of shares outstanding. Add debt, execution risk and dependence on a relatively concentrated group of huge customers, and the story suddenly has a few more pages than “AI demand goes up, stock goes up.” 🧠 How Big Can Nebius Actually Get? Potentially very big, provided the AI infrastructure boom keeps running and Nebius executes on its construction plans. The opportunity exists because hyperscalers and AI developers currently need extraordinary amounts of computing power faster than traditional data-center infrastructure can supply it. Nebius has positioned itself right in the middle of that shortage. The risk is almost the mirror image. Building gigawatts of AI infrastructure assumes demand remains enormous years into the future, while competitors are simultaneously building their own gigawatts. And somewhere in California, Leopold Aschenbrenner is watching with mixed emotions. Nebius was among his hedge fund’s biggest bets before margin calls forced him to sell to Citadel in the final days of July. A 78% rebound from his selling point is the market’s way of checking whether traders can still feel something. Off to you: What’s your take on Nebius NBIS? Are you excited about its growth prospects or do you expect to see another sharp pullback soon?