From Red to Black: Nebius Swings to Positive EBITDA as $50 Billion Backlog Fuels AI Capacity Blitz

Nebius has crossed a critical threshold in its transformation from startup to infrastructure heavyweight. The AI cloud specialist swung to an adjusted EBITDA of $129.5 million in the first quarter of 2026, compared with a loss of $53.7 million a year earlier — a $183 million turnaround that signals the business model is gaining traction. Revenue hit $399 million for the three-month period, up 684% year on year, with the AI cloud segment alone contributing $389.7 million, a staggering 841% jump.

The improved profitability comes as the company simultaneously cranks up its capital spending to levels that would have seemed unthinkable just months ago. Capital expenditure in Q1 reached $2.47 billion, a 355% increase from the prior year, and Nebius has lifted its full-year 2026 investment guidance to between $20 billion and $25 billion, up from the previous range of $16 billion to $20 billion. The extra firepower is being directed at a single imperative: securing enough power, land and chips to stay ahead of insatiable demand for AI compute.

That demand is most visible in the bidding war for Nebius’s GPUs. Management reports that four customers are competing for each available unit, a dynamic that has turned capacity into pricing power. The company’s installed power capacity has swelled from 2 gigawatts at the end of 2025 to more than 3.5 gigawatts in just three months. Its next major project — a 1.2-gigawatt data center campus in Pennsylvania — will anchor the push toward a target of over 4 gigawatts of contractually secured capacity by the end of 2026. The first phase of the Pennsylvania site, between 250 and 350 megawatts, is slated to go live by the end of 2027. Unlike many peers, Nebius plans to own roughly 75% of its facilities outright, a capital-intensive strategy that gives the company more control over critical infrastructure.

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The financial backing for this build-out is unusually solid for a growth-stage company. Nebius holds $9.3 billion in liquid cash and has a $50 billion backlog of customer commitments, anchored by a five-year Meta contract valued at $27 billion — $12 billion firm and $15 billion in options — as well as a $17.4 billion five-year deal with Microsoft. Nvidia, meanwhile, holds a strategic equity stake of $2 billion, representing 8.3% of Nebius’s shares, a relationship that ensures preferential access to scarce AI hardware. Management says more than 90% of the planned capital expenditure is already underwritten by existing cash and contracts, though some analysts still project a cumulative free-cash-flow drain of roughly $57 billion over five years.

Against that backdrop, the stock has become a magnet for analyst upgrades. Citi raised its price target from $169 to $287, implying a 38% upside from the recent close of $207. Citizens JMP lifted its target to $270, DA Davidson to $250, and Bank of America to $205. The common thread: Nebius is emerging as the leading pure-play provider of AI-native cloud infrastructure — the so-called neocloud — where first-mover advantage in capacity is the ultimate competitive moat.

For the full year 2026, Nebius is guiding for revenue of $3 billion to $3.4 billion and an annualized revenue run rate of $7 billion to $9 billion by year-end, with an adjusted EBITDA margin of roughly 40% — assuming the new capacity comes online as planned. The company also aims to push its contractual power commitment past 4 gigawatts by December, a milestone that would cement its position in a market where the only thing growing faster than demand is the cost of meeting it.

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