Nebius Group (NASDAQ:NBIS) saw its shares climb 5% in Tuesday's trading session, closing at $193.23, as investors positioned ahead of the company's second-quarter earnings release scheduled for Wednesday morning. The stock extended gains in after-hours trading, rising another 5.57% to $204.00, even as the broader Nasdaq Composite slipped 0.60%.
The Amsterdam-based AI infrastructure firm is under the spotlight as it approaches a pivotal earnings report. The company needs to demonstrate that its contracted power capacity is being converted into revenue-generating capacity, a key metric that underpins its 2026 guidance. Management has forecast full-year revenue between $3.0 billion and $3.4 billion, which implies second-half sales of $2.03 billion to $2.43 billion, based on consensus estimates for the first half.
For the second quarter, analysts expect revenue of approximately $569.9 million, which would bring first-half totals to around $968.9 million. This sets the stage for a challenging second half, requiring average quarterly revenue of $1.02 billion to $1.22 billion, representing growth of 78% to 113% over the Q2 consensus.
Investors are closely watching whether Nebius can deliver on its power commitments. The company projects connected power will reach 800 megawatts to 1 gigawatt by year-end, with a notable capacity increase expected in the third quarter. However, delays at its Vineland, New Jersey facility have raised concerns. D.A. Davidson analyst Gil Luria lowered his price target to $175 from $250, maintaining a Hold rating, and warned that "the narrative on Nebius could change" if the company fails to translate power into revenue.
Despite these concerns, other analysts remain bullish. Goldman Sachs maintained a Buy rating and raised its price target to $286 on August 10, while Citi set a target of $278. The average analyst price target stands at $241, with seven Buy ratings and five Hold ratings over the past three months, and no Sell ratings.
The company's financial position remains strong, with $9.30 billion in cash and equivalents at the end of March, against non-current debt of $8.43 billion. Capital spending reached $2.47 billion in the first quarter as construction ramped up. However, the stock's 14.4% decline last week has heightened expectations for clarity on Q3 capacity timing and revised year-end power outlooks.
Peer CoreWeave (NASDAQ:CRWV) reported second-quarter revenue of $2.58 billion, beating consensus, with a backlog of $104 billion, providing some positive sentiment for the AI infrastructure sector. However, Nebius faces unique execution risks, including potential delays at Vineland, the need for additional funding, and supply chain constraints. With short interest at 30.22% of float, price swings could be amplified in either direction.
As the earnings release approaches, all eyes will be on whether Nebius can reassure investors that its contracted demand is converting to billable usage, a critical factor for sustaining its ambitious growth trajectory.
