Shares of Nebius Group N.V. closed sharply higher on Friday, gaining 9.3% to finish the session at $98.01. The rally followed the company's detailed presentation of a significant multi-year investment strategy, even as its latest quarterly financial results fell short of analyst expectations.
Ambitious Buildout Strategy Unveiled
Management outlined a capital expenditure plan for 2026 ranging from $16 billion to $20 billion, earmarked for investments in semiconductors, server infrastructure, and new data center locations. Chief Financial Officer Dado Alonso informed analysts that approximately 60% of this projected capital is already secured, drawing from the company's existing balance sheet, operational cash flow, and prior financing commitments.
Concurrently, founder and CEO Arkady Volozh reaffirmed the company's target for annualized run-rate revenue to reach between $7 billion and $9 billion by the end of 2026. This target scales the company's most recent quarterly revenue performance over a full year.
Q4 Financials Show Expansion Costs
The aggressive growth plans come at a cost. For the fourth quarter, Nebius reported revenue of $227.7 million, which missed consensus estimates. The company posted a net loss of $249.6 million for the period. Capital expenditures soared to roughly $2.1 billion in the quarter alone, underscoring the intense investment phase.
In a shareholder letter, Volozh justified the escalated spending by pointing to robust demand from enterprise and "AI native" customers, which he said is currently outpacing the company's available capacity. This demand allows Nebius to pre-sell future compute capacity.
Infrastructure and Power Commitments
The company also provided an update on its physical infrastructure rollout, a critical metric for cloud and AI service providers. Nebius stated it has secured over 2 gigawatts of contracted power capacity for its data centers, with a goal to increase this to more than 3 gigawatts by the end of 2026. This represents an increase from a previous target of over 2.5 gigawatts.
Market Context and Trading Activity
Friday's trading session was volatile for Nebius, with the stock price swinging between approximately $88 and $100. Trading volume was heavy, with around 20.5 million shares changing hands. The rally capped a week of significant price swings following the company's earnings and outlook release.
The activity occurred ahead of a shortened U.S. trading week, with markets closed on Monday for the Presidents Day holiday. Trading will resume on Tuesday, leaving investors to ponder whether Friday's positive momentum can be sustained.
Competitive Landscape and Risks
Nebius operates in the high-performance "neocloud" segment, renting AI computing power rather than offering consumer platforms, competing with firms like CoreWeave. The company remains reliant on Nvidia's chips for a substantial portion of its customer workloads.
Management and analysts have identified several execution risks. These include potential slippage in the buildout timeline, further tightening in the supply of critical GPUs, or an increase in the cost of capital. Should these risks materialize, Nebius might need to scale back its ambitions or seek additional financing, potentially through share issuance that could dilute existing stockholders.
The broader market provided little tailwind, with U.S. equities ending the week lower as investors continue to weigh the sustainability of massive AI investments across the sector, despite recent encouraging inflation data that has bolstered hopes for interest rate cuts.
Investors returning on Tuesday will be closely monitoring for new details on how Nebius plans to finance its 2026 expansion as customer orders and power agreements are finalized and converted into tangible shipments and revenue.
