Nebius Group N.V. (NASDAQ:NBIS) has become one of the most talked-about AI infrastructure companies of 2025, rising more than 200% year-to-date and trading at $113.44 after a remarkable rally fueled by its multi-year partnership with Microsoft (NASDAQ:MSFT). Despite a short-term pullback of 7.8%, the stock remains at the center of Wall Street’s attention following confirmation of a $17.4 billion to $19.4 billion GPU cluster supply deal that transforms Nebius into a key infrastructure provider for Microsoft’s Azure AI platform. The contract, stretching through 2026, gives Nebius long-term revenue visibility and allows it to leverage Microsoft’s AAA credit strength to secure cheaper financing for expansion, positioning the company as one of the few credible hyperscale suppliers outside the big three cloud giants.
Financial results reflect that momentum. In Q2 2025, revenue surged 769.7% year-over-year to $105.1 million, while net income jumped 205% to $584.4 million, producing a staggering 556% net profit margin. Operating expenses rose to $186.2 million, up 78%, as Nebius continued to scale aggressively, and EBITDA stood at -$91.9 million, narrowing losses from previous quarters as margins improved. The effective tax rate of just 0.16% supports flexibility in cash retention, while profitability continues to outpace expectations for a company still in the buildout phase.
The balance sheet underscores how fast Nebius is growing. The company ended June 2025 with $1.68 billion in cash and short-term investments, a drop from last year’s levels as funds were redirected toward infrastructure. Total assets rose 15.4% to $5.1 billion, and liabilities climbed 1,541% to $1.32 billion, showing the impact of strategic leverage as Nebius expands capacity across North America and Europe. Shareholder equity stands at $3.78 billion, keeping leverage manageable and providing room for additional capital deployment. With a price-to-book ratio of 7.78, the market is already pricing in significant future growth, though not yet reflecting the full revenue potential of its Microsoft contract.
The company is executing a record-breaking capital expenditure plan of $2 billion for FY2025, aimed at increasing total compute capacity from 220 MW this year to 1 GW by the end of 2026. Its Vineland, New Jersey data center, built to handle 300 MW, will serve as the main hub for the Microsoft deal while leaving additional room for new enterprise clients. These investments are transforming Nebius into one of the few scalable alternatives to hyperscalers like Amazon Web Services and Google Cloud, allowing it to capture the AI infrastructure demand overflow.
Unlike competitors such as CoreWeave, Nebius operates a full-stack AI platform that goes beyond GPU leasing. It integrates compute, data storage, networking, and developer tools in one ecosystem, enabling clients to deploy AI workloads faster and more efficiently. This makes Nebius more of a software-enabled platform than a hardware rental business. Microsoft’s choice to expand with Nebius rather than exercise its $12 billion option with CoreWeave highlights the strength of this model. The integration of Nebius’ proprietary AI deployment software suite further strengthens client stickiness and establishes a durable moat similar to Nvidia’s CUDA ecosystem.
Valuation remains elevated, with Nebius trading at over 120x price-to-sales, yet that figure reflects how early the company is in monetizing its contracts. The Microsoft agreement alone represents revenue potential roughly 80 times greater than its trailing 12-month revenue base of $250 million. Analysts point to Nebius’ ability to convert backlog into realized cash flow over the next two years, which could bring annual revenues into the multi-billion range by 2027. The company’s structure now resembles a long-term AI “utility” model, absorbing the capital-intensive infrastructure costs that hyperscalers are increasingly outsourcing to third parties.
The market reaction has been dramatic. Nebius’ market capitalization now exceeds $30 billion, up from less than $10 billion before the Microsoft announcement. Wall Street sentiment is overwhelmingly positive, with a Strong Buy consensus and an average analyst target implying continued upside. However, high expectations mean any execution slip could trigger volatility. Despite that, the operational visibility and balance sheet capacity now available to Nebius give it far greater durability than most peers in the AI compute space.
At this stage, Nebius represents a structural winner in the artificial intelligence arms race. It is not merely renting GPUs but building the digital backbone that will power the next generation of AI workloads. The company’s ability to secure anchor clients, expand capacity, and monetize its full-stack platform makes it one of the most strategically positioned AI infrastructure stocks globally. With revenue up 769%, net income at $584 million, and assets climbing past $5 billion, Nebius has evolved from an ambitious startup to a cornerstone player in high-performance AI computing. The pullback to $113 may present one of the last chances to accumulate before the next growth wave.
Verdict: BUY – Nebius remains undervalued relative to its long-term revenue visibility, AI infrastructure leadership, and Microsoft-anchored expansion. Price target: $160–$180 over the next 12 months.
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