Nebius Is Priced For Flawless Delivery

2026-06-06 10:59:52 ET

Investment Thesis

• Execution is running ahead of every target management has set . Contracted power has gone from just over 1 GW in August 2025 to more than 3.5 GW today. The year-end target has been raised to over 4 GW , capacity is effectively sold out, and pipeline generation rose roughly 3.5x quarter over quarter in Q1. Q1 revenue of $399M grew 684% YoY and 75% QoQ, with both growth rates accelerating from Q4.
• The revenue is substantially de-risked . Roughly $47B of committed contract value across Microsoft ( MSFT ) ($17.4B) and Meta ( META ) (up to $29.9B across two agreements), $4.8B of customer prepayments sitting in deferred revenue, and a $2.0B NVIDIA ( NVDA ) equity investment have converted the financing problem that kills most neoclouds into a solid delivery schedule.
• The equity at $220 prices exactly my base case . Counting the funding still to come, the market is paying roughly 7.4x my 2027E revenue, effectively in line with my 7.5x target multiple, against CoreWeave ( CRWV ) at roughly 4.2x 2027E revenue. The weighted diluted share count grew 30% in twelve months, and I model a further ~$25B of net debt by the end of 2027. The 20% pullback from the June 1 high of $274.80 has taken the bull-case premium out of the price, but it has not created a discount (yet).
• The unit economics clear the cost of capital, but not by much, and only across two contract cycles . My rough calculation is that a five-year committed contract at $8-9M of revenue per MW-year returns ~75 cents per dollar of the ~$33M per MW invested within the first GPU cycle; the equity return lives in the owned shell-and-power layer (more than 75% of Nebius contracted GW) and in re-contracting refreshed fleets at held prices, neither of which is yet observable at scale.

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