AI cloud firm Nebius reports near eightfold revenue jump, shares surge
Nebius Group’s Financial Performance and Strategic Expansion
Quarterly Revenue Growth and Market Response
May 13 (Reuters) - Nebius Group reported a nearly eightfold rise in quarterly revenue on Wednesday, benefiting from rising demand for artificial intelligence infrastructure and cloud services amid a boom in enterprise spending on the technology.
Shares of Amsterdam-based Nebius soared 13% in premarket trading.
Capital Expenditure and AI Cloud Investments
Increased Spending on Hardware and Infrastructure
Investments in graphics processing units and data center hardware for its core AI cloud business drove first-quarter capital expenditure to about $2.5 billion, compared with $544 million a year earlier and above analysts' estimate of $2.4 billion, according to Visible Alpha.
Market Position and Service Offerings
The company has grabbed a slice of the lucrative AI and cloud infrastructure market by providing Nvidia GPUs and computing platforms to developers.
Nebius offers storage, managed tools and software to help customers build, train and deploy models using its proprietary cloud architecture and in-house hardware.
Growth Outlook and Analyst Perspectives
Data Center Expansion Plans
Analysts expect the company to significantly ramp up its data center capacity to 900 MW by the end of this year, which could drive strong revenue growth.
Concerns Over Capital Spending
However, analysts have flagged its heavy capital spending as a major concern as Nebius aggressively expands its global data center footprint, putting pressure on margins despite strong revenue growth.
Comparison with Industry Rivals
The concerns mirror those at larger rival CoreWeave, which has projected between $30 billion and $35 billion in capital spending this year, warning that the investment ramp-up could weigh on near-term margins.
Strategic Moves and Major Deals
Acquisitions and Partnerships
Nebius Group has been expanding its AI infrastructure business through acquisitions and large computing contracts.
The company agreed earlier this month to buy startup Eigen AI for about $643 million to strengthen its inference platform and U.S. presence.
Nebius also signed a long-term deal with Meta to provide up to $27 billion worth of computing capacity over five years.
Financial Highlights
Revenue for the three months ended March jumped to $399 million from $50.9 million a year ago, beating an estimate of $371.4 million, according to data compiled by LSEG.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Pooja Desai)
