Nebius Surpasses Quarterly Estimates as AI Cloud Demand Skyrockets
Strong Quarterly Performance Driven by AI Cloud Growth
By Rashika Singh
Revenue and Market Reaction
Aug 12 (Reuters) - Nebius beat quarterly revenue estimates on Wednesday as booming demand for AI infrastructure helped it land larger contracts and increase prices, sending shares of the cloud-computing company up more than 20%.
The results came a day after larger rival CoreWeave raised its annual forecasts, with shares of AI infrastructure companies broadly advancing as strong results from both firms reinforced investor expectations that demand for AI computing capacity continues to outstrip supply.
AI Cloud Unit Performance
Revenue at Nebius' mainstay AI cloud unit rose nearly sixfold, powering overall sales to $582.3 million in the second quarter ended June, which beat estimates of $572.75 million, according to LSEG data.
CEO Insights and Strategic Deals
Nebius is converting growing demand into "contracted, profitable growth", CEO Arkady Volozh said.
The Nvidia-powered AI cloud provider signed four AI cloud deals averaging more than $1 billion each, as total contract value nearly quadrupled and new-customer contract values jumped more than ninefold.
Competition and Industry Outlook
When asked about rising competition from new entrants such as xAI, CEO Volozh said demand for AI computing remained well ahead of supply and that Nebius could sell all of its planned 2027 capacity at current terms.
Emarketer analyst Jacob Bourne agreed that demand for AI cloud capacity keeps soaring despite intensifying competition, but added, "the bigger question is how diversified and durable that demand proves to be beyond the AI industry itself."
Capital Expenditures and Future Projections
Capital expenditures totaled about $5.7 billion during the quarter, topping analysts' expectations of $4.7 billion, according to Visible Alpha, as Nebius continued investing aggressively in GPUs and data-center expansion.
AI cloud deals signed in the quarter, with annual contract values above $20 million per megawatt, are expected to come online in late fourth quarter, the company said.
Capacity Expansion and Customer Commitments
It raised its contracted power target for 2026 to 5 gigawatts from more than 4 gigawatts previously, and expects to deploy more than 1 GW of capacity annually starting in 2027, which is enough electricity to power roughly 750,000 U.S. homes.
The company expects more than $9 billion in customer prepayments this year and said it has more than $40 billion in customer commitments.
(Reporting by Rashika Singh in Bengaluru; Editing by Vijay Kishore)
