Is Nebius' $2B Capex Spend on AI Infra a Smart or a Risky Bet?
Nebius Group N.V. NBIS is doubling down on AI infrastructure with an ambitious $2 billion capital expenditure plan for 2025, up from its earlier guidance of $1.5 billion. NBIS stated that the increase was primarily due to some planned fourth-quarter spending shifting into the early first quarter.
Nebius is focusing on building a global footprint, with capacity in the United States, Europe and the Middle East amid accelerating demand for its AI-infrastructure services. It added three new regions, including a strategic data center in Israel, in the last reported quarter. Infrastructure enhancement helps reduce latency, diversify risk and extend support for global customer requirements, which is crucial for enterprise AI workloads. In June 2025, NBIS announced private placement of $1 billion in convertible notes to capitalize on the AI-infrastructure boom and drive-up revenue opportunities in 2026.
But is this ambitious capex plan a sound long-term investment, or a big capital risk?
Nebius is carrying strong momentum into the second quarter of 2025 and remains confident in achieving its full-year annualized run-rate revenue or ARR guidance of $750 million to $1 billion. For 2025, the company also reaffirmed its overall revenue guidance of $500 million to $700 million. This makes for a compelling case to scale faster as it races to gain a larger share of the booming AI market characterized by intense competition. NBIS plans to build a data-center infrastructure pipeline that can offer scalability to more than 1 gigawatt ('GW') of capacity. With 1 GW of power, NBIS expects significantly higher revenue beyond its current guidance.
Nonetheless, Nebius' capex spend appears prudent, but its payoff hinges on execution, continued AI demand and the ability to scale profitably.
Taking a Look at the Capex Plans of NBIS' Competitors
Like Nebius, CoreWeave CRWV is also ramping up its capex spend. CRWV expects capex to be between $20 billion and $23 billion for 2025 due to accelerated investment in the platform to meet customer demand. At present, it has a network of 33 purpose-built AI-data centers across the United States and Europe, supported by 420 megawatts of active power. The company uses a success-based model, entering capex programs only after securing multi-year customer contracts that cover investment costs within the contract terms, helping it to sensibly scale the debt structure. Capex reached $19 billion in the first quarter of 2025.
Microsoft MSFT is a giant in this space, with Azure Cloud being one of the dominant forces in the AI-cloud infra space. MSFT is allocating significant capital expenditures to scale its AI infrastructure. In the third quarter of fiscal 2025, the company spent $21.4 billion on capex. It paid $16.7 billion for PP&E. MSFT highlighted that nearly half of the cloud and AI-related spend was on long-lived assets that will support monetization over the next 15 years and more. The remainder focused on servers (CPUs and GPUs) to fulfill rising AI demand, including a $315 billion customer backlog. Looking ahead to fiscal 2026, capex will grow at a slower rate than fiscal 2025, with a higher share of short-lived assets.
NBIS Price Performance, Valuation and Estimates
Shares of Nebius gained 82.5% year to date compared with the Internet – Software and Services industry's growth of 26.6%.
In terms of price/book, NBIS' shares are trading at 3.77X, down from the Internet Software Services industry's ratio of 4.2X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NBIS' earnings for 2025 has been unchanged over the past 30 days.
NBIS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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