Computing power is gold! A single contract surpassed $1 billion, and AI startup Nebius (NBIS.US) cloud business revenue soared 500% and soared before the market

The Zhitong Finance App learned that Nebius (NBIS.US) cloud business sales soared 514% year over year in the second quarter, driven by strong demand for artificial intelligence computing power. Financial reports show that the AI cloud business, which accounts for the vast majority of its business, reached $575 million in revenue during the quarter. Total revenue for the quarter surpassed $582 million, up 454% year over year. This figure was higher than analysts' expectations of $557 million; loss per share was $0.68, exceeding expectations of $0.18.

The company's shares rose about 16% during Wednesday's pre-market trading.

The company also reaffirmed its 2026 full-year performance outlook and said demand for AI computing power continues to accelerate, which will help it lock in larger, more profitable customer contracts.

In the first quarter results report released in May, Nebius reiterated its forecast for the full year of 2026. It expects annualized revenue of 7 billion to 9 billion US dollars, group revenue of 3 billion to 3.4 billion US dollars, and the group's adjusted EBITDA profit margin of about 40%. The market generally expects revenue of $3.38 billion.

CEO Arkady Voloz said, “We've done everything we set out to do this quarter,” and “for the most part, we've done more.”

The statement stated that the value of contracts won this quarter has quadrupled from the previous quarter, including four agreements with an average value of more than $1 billion.

The company said pricing increased this quarter, benefiting from demand for next-generation AI chips and higher rates for older GPUs. Approximately 70% of contracts signed during this period included customer advances, covering 50% to 60% of related capital expenses.

Nebius said four landmark AI cloud deals were finalized during the quarter, with an average total contract value of over $1 billion each, an increase of nearly four times over the previous quarter.

Voloz pointed out that new pricing initiatives launched at the beginning of the third quarter (such as initial auctions and short-term computing power transactions) showed good prospects. He added that the company saw price opportunities in the range of $40 million to $50 million per megawatt and signed the first such contract this week.

Competitor CoreWeave Inc., predicted higher than expected third-quarter sales on Tuesday, driven by an ongoing AI spending spree.

Shorter return on capital expenditure cycles

Nebius is one of several so-called “new cloud” companies that rent computing power in data centers, responding to the huge global demand for infrastructure that can handle AI workloads. The company split from Russian internet giant Yandex in 2024 and has reached cooperation agreements with Nvidia and large data center operators such as Microsoft and Meta Platforms Inc.

Building infrastructure for AI workloads is an expensive business. Nebius said in a statement that it received $775 million in financing in July, backed by assets including GPUs. In the second quarter, the company spent a total of approximately $5.7 billion to buy chips, equipment, and expand data centers.

Voloz said that taken together, the expected payback period for capital expenses and related operating costs associated with the second quarter transaction is 1 year and 10 months, which is lower than the previous expected payback period of 2 to 3 years.

Nebius indicated that the company will continue to increase capital expenditure this year and plans to use diversified financing channels.