re: Nebius - NBIS - AI Infrastructure Company

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It’s going to be interesting to see what happens this time.

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Organic Growth: Nebius’s core AI cloud business grew 625% year-over-year in Q2 2025, with ARR increasing from $249 million in March to $430 million in June. Assuming continued high growth (e.g., 200%–300% year-over-year), the core business could contribute $2–$3 billion to ARR by 2026 without the Microsoft deal.

- Total 2026 ARR Estimate: Combining organic growth ($2–$3 billion) and the Microsoft deal contribution ($1.74 billion), 2026 ARR could range from $3.74 billion to $4.74 billion. For simplicity, let’s use a midpoint of ~$4.25 billion.

Determining the 2026 ARR Multiple
The appropriate EV/ARR multiple depends on Nebius’s growth profile, profitability outlook, and market sentiment toward AI infrastructure stocks in 2026. Here’s a framework:
- Current Valuation: Nebius’s EV of $7.7 billion at 3.3x April 2025 ARR ($310 million) is low compared to peers like CoreWeave (10x).
- Peer Benchmark: CoreWeave’s 10x multiple reflects its position as a high-growth AI infrastructure provider. Nebius’s faster growth (182% last twelve months vs. CoreWeave’s 100%+) and the Microsoft deal’s scale suggest it could command a similar or higher multiple.
- Upside Scenarios:
- Conservative (5x ARR): Reflects modest re-rating, valuing Nebius at $5 billion EV for $1 billion ARR in 2025, but for $4.25 billion ARR in 2026, this implies an EV of ~$21.25 billion.
- Moderate (10x ARR): Aligns with CoreWeave’s multiple, implying an EV of ~$42.5 billion for $4.25 billion ARR.
- Optimistic (20x ARR): Reflects a premium for exceptional execution, new contracts, and AI market enthusiasm, implying an EV of ~$85 billion.
- Profitability Outlook: Nebius expects adjusted EBITDA to turn positive in H2 2025, reducing risk and potentially justifying a higher multiple.
- Market Sentiment: The 50%+ stock surge post-Microsoft deal announcement (from ~$60 to ~$91.63 after hours) indicates strong investor confidence. Continued deal wins and capacity expansion (e.g., 1 GW by 2026) could drive further re-rating.

Recommended 2026 ARR Multiple
Given Nebius’s rapid growth, the transformative Microsoft deal, and its undervaluation relative to peers, a 2026 EV/ARR multiple of 8x–12x is reasonable:
- 8x: Accounts for competitive risks and execution challenges but reflects Nebius’s strong growth and deal-backed revenue.
- 12x: Assumes Nebius secures additional contracts, achieves EBITDA positivity, and benefits from AI infrastructure market enthusiasm, aligning closer to CoreWeave’s 10x and allowing for a slight premium due to its cash position and deal visibility.

For a $4.25 billion 2026 ARR, this implies an EV range of $34 billion–$51 billion. Adjusting for Nebius’s $1.44 billion cash hoard and potential debt issuance (per), the equity value would be slightly higher.

Risks to Consider
- Execution Risk: Phased deployment in 2025–2026 could face delays, impacting ARR ramp-up.
- Competition: CoreWeave, Microsoft Azure, and others may pressure margins or market share.
- Macro Factors: Trade wars or economic slowdowns could dampen AI spending, though demand is currently robust.

Final Answer
Nebius (NBIS) should trade at an EV/ARR multiple of 8x–12x per its 2026 ARR, reflecting its high growth, the Microsoft deal’s revenue visibility, and alignment with peer valuations like CoreWeave’s 10x. For an estimated 2026 ARR of ~$4.25 billion, this suggests an enterprise value of $34 billion–$51 billion. Investors should monitor execution on the Microsoft deal, additional contract wins, and EBITDA progress for potential re-rating toward the higher end of this range.

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Holy crap I've been busy all day and I just saw the news. Wow this is awesome haha

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