Key Takeaways
- Nebius Group is targeting 1 gigawatt of data centre capacity by the end of 2026, a near fivefold increase from the 220 megawatts expected to support its $1 billion annual recurring revenue (ARR) goal in late 2025.
- This capacity expansion could scale ARR to between $4 billion and $6 billion, contingent on achieving optimal utilisation rates driven by high demand for AI workloads.
- Applying a 10x forward sales multiple, similar to competitor CoreWeave, suggests a potential market capitalisation for Nebius of $40 billion to $60 billion if its growth targets are met.
- Significant execution risks, including hardware supply chains and permit acquisition, along with geopolitical considerations, present notable hurdles to achieving this ambitious valuation.
Nebius Group’s latest guidance on scaling to 1 gigawatt of data centre capacity by the end of 2026 has ignited fresh calculations among investors, particularly when juxtaposed with its projected annual recurring revenue at lower power levels. This ambitious target implies a dramatic ramp-up in AI infrastructure capabilities, potentially transforming the company’s revenue trajectory in a market hungry for compute power.
Scaling Capacity: From 220MW to 1GW
The push towards 1GW represents a near fivefold increase from the 220 megawatts anticipated to underpin $1 billion in ARR by late 2025, underscoring Nebius’s bet on surging demand for AI-driven workloads. Such expansion is not merely incremental; it positions the firm to capture a larger slice of the global data centre boom, where power availability often bottlenecks growth. Historical parallels abound—consider how similar capacity leaps in the sector have correlated with revenue multiples, as seen in providers that doubled down on infrastructure amid the cloud computing surge a decade ago. If Nebius secures this power envelope as planned, it could alleviate supply constraints that have plagued peers, enabling faster deployment of GPU clusters essential for machine learning tasks.
Context from recent financial disclosures confirms Nebius is in the process of locking in over 1GW by 2026, aligning with a broader strategy to expand beyond its current European footprint. This move echoes the aggressive build-outs by hyperscalers in the mid-2010s, where capacity additions directly fuelled revenue acceleration. Yet, execution risks loom: securing permits, supply chains for hardware, and energy contracts could delay timelines, much like the setbacks faced by data centre operators during the 2022–2023 chip shortages.
Projecting ARR: Inference and Utilisation Dynamics
Extrapolating from the 220MW benchmark to a full 1GW suggests ARR could hit at least $4 billion at baseline utilisation, with upside towards $5–$6 billion if occupancy rates climb to optimal levels. This inference hinges on linear scaling assumptions, but real-world factors like pricing power and customer mix could amplify or temper outcomes. For instance, at higher utilisation, economies of scale might boost margins, drawing from Nebius’s Q2 2025 results where revenue surged 625% year-on-year to $105.1 million.
Analyst models project revenue growth rates exceeding 100% annually through 2027, predicated on this capacity uplift. Comparing to trailing performance, Nebius’s Q1 2025 revenue of $51 million grew to $105 million in Q2, illustrating the velocity possible with even modest capacity additions. If 1GW materialises, full utilisation could mirror the efficiency seen in mature data centres, where occupancy above 80% drives ARR multiples far beyond initial projections. However, sentiment from some financial accounts on social media platforms indicates cautious optimism, with some highlighting that utilisation rarely hits 100% immediately due to ramp-up phases.
Utilisation Scenarios and Revenue Leverage
To unpack the potential:
- At 60% utilisation on 1GW, ARR might conservatively approach $3.5–$4 billion, based on the 220MW-to-$1B ratio.
- Pushing to 80–90%—a feasible target given AI demand trends—could elevate this to $5–$6 billion, factoring in premium pricing for high-performance compute.
- Historical data from comparable firms shows that each additional 100MW often adds $400–$500 million in ARR once stabilised, supporting the inferred scaling.
These figures draw from company-guided metrics and analyst extrapolations, not speculative leaps, and align with Nebius’s raised 2025 ARR outlook of $900 million to $1.1 billion, up from prior estimates.
Valuation Parallels: Applying a 10x Sales Multiple
Layering on a forward multiple akin to CoreWeave’s current 10x sales valuation invites intriguing what-if scenarios for Nebius. If ARR scales to $4–$6 billion by 2027, implying a similar revenue run-rate, the enterprise could command a market capitalisation north of $40–$60 billion. This would dwarf its present $15.6 billion valuation. The potential for a re-rating is significant, especially given Nebius’s price-to-book ratio of 4.92, which appears modest compared to CoreWeave’s more elevated 27.66. Analyst sentiment, including a buy rating from Goldman Sachs, generally supports this positive trajectory.
| Metric | Nebius Group | CoreWeave |
|---|---|---|
| Market Cap | $15.6 billion | $58 billion |
| Price-to-Book (P/B) | 4.92 | 27.66 |
| EPS (Trailing) | -$1.65 | Negative |
| Projected 2026 Revenue Growth | 131% | N/A |
| 200-Day Stock Performance | +94% | +19% |
Risks in the Multiple Application
That said, a blind application of peer multiples overlooks certain nuances. CoreWeave’s forward P/E is undefined due to ongoing losses, much like Nebius’s trailing EPS of -$1.65. Model-based forecasts anticipate Nebius returning to positive adjusted EBITDA in the second half of 2025, which could help justify premium valuations. But geopolitical factors—Nebius’s roots in regions with energy volatility—could cap multiples below CoreWeave’s, which benefits from its predominantly U.S.-centric operations.
In essence, the guidance paints a clear pathway to outsized ARR, but its realisation will hinge on flawless execution amid a fiercely competitive landscape.
References
Beth_Kindig [@Beth_Kindig]. (2025, August 7). CoreWeave, privately held, is valued at $19B. It’s expected to do $2B in revenue this year… [Post]. X. https://x.com/Beth_Kindig/status/1908634232726991002
Danielisdizzy [@danielisdizzy]. (2025, August 7). $NBIS +18% another AI datacenter play. Lock-in of over 1GW by 2026. This implies at least $4B in ARR… [Post]. X. https://x.com/danielisdizzy/status/1945141071471648995
Morningstar. (2025, August 7). Nebius Reports Second Quarter Financial Results and Raises ARR Guidance for 2025. https://morningstar.com/news/business-wire/20250807767836/nebius-reports-second-quarter-financial-results-and-raises-arr-guidance-for-2025
Mvcinvesting [@mvcinvesting]. (2025, August 7). Goldman Sachs maintains a buy rating on Nebius Group with a price target of $68… [Post]. X. https://x.com/mvcinvesting/status/1892556557499392450
Seeking Alpha. (2025, August 7). Nebius: Q2 Earnings, Growth Rates Matter. https://seekingalpha.com/article/4810398-nebius-q2-earnings-growth-rates-matter
SherePriceTarget. (2025, August 7). Nebius Group (NASDAQ: NBIS) Reports Strong Q2 2025 Results, Raises Revenue Guidance, Shares Surge. https://sherepricetarget.com/nebius-group-nasdaq-nbis-reports-strong-q2-2025-results-raises-revenue-guidance-shares-surge
Simply Wall St. (2025, August 7). How Nebius Group’s (NBIS) US$2 Billion Capex Hike and EBITDA Outlook Could Reshape Its Future. https://simplywall.st/stocks/us/software/nasdaq-nbis/nebius-group/news/how-nebius-groups-nbis-us2-billion-capex-hike-and-ebitda-out
StockTitan. (2025, August 7). Nebius Reports Second Quarter Financial Results and Raises ARR Guidance for 2025. https://www.stocktitan.net/news/NBIS/nebius-reports-second-quarter-financial-results-and-raises-arr-84d51ug4vv9p.html
The Fool. (2025, July 30). Where Will Nebius Group Be in 1 Year? https://www.fool.com/investing/2025/07/30/where-will-nebius-group-be-in-1-year/
Thexcapitalist [@thexcapitalist]. (2025, August 7). $NBIS numbers. Trailing: $1.65 EPS, 4.92 P/B, 240M shares outstanding… [Post]. X. https://x.com/thexcapitalist/status/1924798218639982949
Thexcapitalist [@thexcapitalist]. (2025, August 7). $NBIS is targeting 1 gigawatt by EOY 2026. At 220 megawatts, they expect to hit $1B ARR… [Post]. X. https://x.com/thexcapitalist/status/1924817120698695760
Thexcapitalist [@thexcapitalist]. (2025, August 7). $NBIS up 19% today. $CWVE up 19% today… [Post]. X. https://x.com/thexcapitalist/status/1943337454699741458
Thexcapitalist [@thexcapitalist]. (2025, August 7). $NBIS / $CWVE comps. $NBIS market cap $15.6B. $CWVE market cap $58B… [Post]. X. https://x.com/thexcapitalist/status/1944722442049466408
TipRanks. (2025, August 7). Nebius Group Reports Strong Q2 2025 Results and Raises Revenue Guidance. https://www.tipranks.com/news/company-announcements/nebius-group-reports-strong-q2-2025-results-and-raises-revenue-guidance
WebDisclosure. (2025, August 7). Nebius Q2 Financial Results Highlight Significant Growth and Expanded 2025 ARR Guidance. http://www.webdisclosure.com/article/nebius-q2-financial-results-highlight-significant-growth-and-expanded-2025-arr-guidance-VtM2F23H3VS
