Nebius Group N.V. NBIS stock has surged 253.5% in the past year, outperforming the Zacks Computer & Technology sector and the Zacks Internet Software Services industry’s growth of 28.7% and 11.4%, respectively. The S&P 500 composite is up 21.6% over the same time frame. The company’s shares have jumped 23% in a month.
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NBIS has outpaced its peers, NVIDIA Corporation NVDA, Microsoft Corporation MSFT and CoreWeave, Inc. CRWV, with NVDA up 10.4%, MSFT increasing 21.5% and CRWV decreasing 12.7% in the past three months.
Following its strong rally, investors may wonder whether NBIS still has substantial upside potential or whether the stock’s valuation already reflects much of its growth prospects. A closer look at the company’s key strengths, growth drivers and challenges can help assess whether the current levels present an attractive opportunity.
Factors to Consider for NBIS
Nebius continues to see enormous demand for its AI infrastructure, supported by strong customer interest across AI-native companies, neoclouds and sophisticated enterprises. During the second quarter of 2026, the company closed four landmark core AI cloud deals, each valued atmore than $1 billion. These competitive wins were driven by Nebius’ scale, performance and reliability, while the company’s pipeline also includes multiple opportunities valued at more than $1 billion.
The company delivered triple-digit revenues and ARR growth in the second quarter, with group revenues increasing 454% year over year to $582 million and annualized run-rate revenues reaching $3 billion. Growth was supported by additional capacity, higher utilization, infrastructure efficiency and contributions from the asset-light model, Token Factory and recent acquisitions. Adjusted EBITDA rose to $236 million, while the adjusted EBITDA margin expanded to 41% from 32% in the previous quarter.
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Nebius is expanding its capacity pipeline and has raised its year-end contracted power target to 5 gigawatts. The company’s asset-light partnership model provides another avenue to scale by allowing partners to finance, build and operate facilities while Nebius supplies its full-stack platform and customer demand. NBIS also launched a capacity auction that cleared at a price 15% above its previous highest price, highlighting the value of its Blackwell capacity.
For 2026, Nebius reaffirmed annualized run-rate revenue guidance of $7 billion to $9 billion, Group revenues of $3 billion to $3.4 billion and Group adjusted EBITDA margin of approximately 40%. The company expects to deploy significantly more capacity in 2027, while 2027 formal guidance will be provided later this year.
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However, Nebius continues to require substantial capital to support its rapid capacity expansion. Capital expenditures totaled approximately $5.7 billion in the second quarter, primarily reflecting GPU and related hardware purchases and data center expansion. For 2026, the company continues to expect capital expenditures of $20 billion to $25 billion, highlighting the significant funding requirements associated with its growth plans.
The company’s capacity expansion involves several steps before connected power translates into revenues, including commissioning data centers, building networks and clusters, deploying the platform and onboarding customers. In the last earnings call, management stated that this process can take several months, creating a gap between connected capacity and revenue generation. In addition, the Vineland site remains subject to the approval process, although management expects no significant impact on the project timeline.
A Look at NBIS' Valuation
In terms of price/book multiple, NBIS shares are trading at 5.54X, higher than the industry’s 3.79X. CRWV, MSFT and NVDA trade at a Price/Book of 7.96X, 8.39X and 24.25X, respectively.
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What to Do With NBIS Stock Now?
Nebius continues to benefit from strong AI infrastructure demand, rapid revenues and ARR growth, expanding capacity and improving profitability, which support its long-term growth prospects. However, elevated capital requirements, capacity deployment timelines and the stock’s strong rally warrant caution at current levels.
Existing investors can hold the stock given its strong growth outlook and expanding AI infrastructure opportunity, while new investors may wait for a better entry point.
Currently, NBIS stock carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).