Company Reports

Our key takeaways from Nebius’ second-quarter call are that GPU spot rental rates continue to climb as the artificial intelligence supply/demand imbalance intensifies and neoclouds want to maximize value extracted from short-term pricing.

Once the supply/demand situation of artificial intelligence normalizes in the coming years, neocloud companies that simply purchase and rent GPUs without any real differentiation will have important struggles, as their current business model looks commoditized, and only viable due to the current scarcity of AI resources. Necloud firms are a new generation of AI-focused cloud infrastructure providers.

Bloomberg reported on July 1 that Meta is planning to enter the cloud infrastructure market by selling excessive artificial intelligence computing power that may put the company in direct competition with neocloud firms. Shares of CoreWeave, Nebius, and IREN were down 14%, 17%, and 5%, respectively.

We are pleased with Nebius' first quarter, which showed not only strong sequential revenue growth but also signs of operational improvement on the profitability side.

Once the supply/demand situation of artificial intelligence normalizes in the coming years, neocloud companies that simply purchase and rent GPUs without any real differentiation will have important struggles, as their current business model looks commoditized, and only viable due to the current scarcity of AI resources. Necloud firms are a new generation of AI-focused cloud infrastructure providers.

Nebius signed a $27 billion revenue deal to deploy capacity for Meta over a five-year period.

Once the supply/demand situation of artificial intelligence normalizes in the coming years, neocloud companies that simply purchase and rent GPUs without any real differentiation will have important struggles, as their current business model looks commoditized, and only viable due to the current scarcity of AI resources. Necloud firms are a new generation of AI-focused cloud infrastructure providers.

Nebius reported $534 million in 2025 revenue and expects $3.0 billion-$3.4 billion revenue for 2026. Management expects to exit 2026 with annualized run-rate revenue of $7 billion-$9 billion, a target already shared a few months ago.

We initiate coverage of Nebius Group.

Once the supply/demand situation of artificial intelligence normalizes in the coming years, neocloud companies that simply purchase and rent GPUs without any real differentiation will have important struggles, as their current business model looks commoditized, and only viable due to the current scarcity of AI resources. Necloud firms are a new generation of AI-focused cloud infrastructure providers.