Shares of Nebius (NASDAQ:NBIS) surged 17.1% to $156.96 in Wednesday morning trading, as investors positioned ahead of the company's third-quarter earnings release scheduled for Thursday. The rally came amid a broader rebound in AI infrastructure stocks following upbeat results from peer CoreWeave (NASDAQ:CRWV).
The market's focus on Nebius centers on its ability to fund an aggressive data-center expansion. The company's latest published accounts, filed with the SEC, reveal a critical metric: operating cash flow covered 55.4% of capital expenditures during the first half of 2026. Specifically, the company generated $4.50 billion in operating cash against $8.13 billion in asset purchases, leaving a funding gap of $3.63 billion before any financing activities.
This gap is not unusual for a hyper-growth company, but it underscores the importance of customer prepayments and equity issuance. Nebius's operating cash flow was significantly boosted by a $4.395 billion contribution from changes in deferred revenue—funds received from customers before services are delivered. These advance payments bring cash forward, but they differ from cash generated after services are rendered, which is a more sustainable source of funding.
Customer Prepayments: A Key Funding Source
Nebius has been actively using customer prepayments to offset its capital spending. In its August shareholder letter, the company disclosed that roughly 70% of contracts closed in the second quarter included prepayments, which covered 50%–60% of the associated capital expenditure for those contracts. This strategy helps reduce the need for external financing, though it also shifts the timing of revenue recognition.
Additionally, Nebius sold 12.7 million shares during the first half of 2026, raising approximately $2.8 billion in equity. This issuance increases the share count, diluting existing shareholders but providing necessary capital for expansion. The combination of prepayments and equity sales is crucial for bridging the gap between operating cash flow and capital spending.
CoreWeave's Results Spark Sector Rally
The immediate catalyst for the AI infrastructure sector came from CoreWeave's November 10 earnings report. The company projected about $9 billion in customer prepayments and deposits over the next three months, highlighting the strong demand for AI compute capacity. CoreWeave also reported third-quarter revenue of $3.661 billion and operating income of $207 million, though net interest expense of $846 million led to a net loss of $709 million.
CoreWeave's CEO Michael Intrator called the quarter a "breakout," and the market responded positively. Steve Sosnick, chief market analyst at Interactive Brokers, told Reuters that the earnings report "helped ease some of those concerns" about AI infrastructure spending. This sentiment lifted shares of Nebius and other players in the space.
Financing Costs Under Scrutiny
CoreWeave's results also shed light on the heavy cost of financing expansion. Its net interest expense was 4.1 times its operating income, a stark reminder of the financial burden that comes with building out data centers. For Nebius, the question remains whether its operating cash flow can keep pace with its capital spending as it scales.
The numbers from Nebius and CoreWeave are not directly comparable due to different reporting periods. Nebius's first-half funding ratio does not establish its September-quarter cash position; that will require the new cash-flow statement and details of capital purchases and financing.
What to Watch in Nebius's Q3 Report
Nebius is scheduled to release its third-quarter results on November 12 before the market opens, with a conference call at 8 a.m. EST (2 p.m. CET). Investors will be keen to see whether the company's operating cash flow continued to cover a significant portion of its capex, and how much of the September-quarter buildout was funded by operating cash versus external financing.
Risks remain, including potential delays in power connections or GPU deliveries, which could postpone billable capacity. Lower customer advances or higher borrowing costs could increase the company's financing needs. Meeting contracted demand still requires infrastructure to enter service on time.
As the AI infrastructure buildout accelerates, the ability of companies like Nebius to fund growth without excessive dilution or debt will be a key determinant of long-term shareholder value.
