Nebius Group (NBIS 2.51%)… now, this is a company with a bit of a twinkle in its eye, and a rather enormous appetite for electricity. It’s not just making power, you see, it’s hoarding it. And in this new world of whizzpopping Artificial Intelligence, that, my friends, is a very clever thing indeed. A 1,000% return over the next decade? Not a certainty, of course, but a distinct possibility, even after it’s already doubled in value – a bit greedy, perhaps, but who are we to judge?
While other chaps are fiddling about with the bits and bobs of AI infrastructure, Nebius offers the whole shebang – the power and the clever software to make the machines think. This has caught the attention of a rather large and important fellow, one Microsoft (MSFT 0.65%), who’s signed a deal worth up to $19.4 billion. That’s a lot of sherbet, even for them. A full 300 megawatts, enough to power a small country, or at least a very enthusiastic collection of computers.
Let’s peel back the layers a bit, shall we? A deeper look reveals a potential that’s… well, captivating. Like a particularly shiny beetle.
Annual Recurring Revenue – A Most Delicious Number
Nebius ended 2025 with $1.25 billion in annual recurring revenue (ARR) and, with a glint in its eye, predicts up to $9 billion for 2026. Ambitious? Certainly. Possible? Highly. They’re adding more and more “gigawatts” – a rather grand word for electricity, don’t you think? – to their pipeline, which will help them snag more contracts like the Microsoft one. They are building a veritable fortress of power.
They anticipate 3 gigawatts of contracted power by the end of 2026, having already secured over 2. That’s enough juice to support nine more deals like the Microsoft agreement. They’re not just selling electricity; they’re selling future electricity. A rather ingenious concept.
And they have a whopping $3.7 billion in cash, which they’re using to gobble up more power and build even more data centers. They’re also acquiring other companies, like Tavily, to bolster their software stack. It’s like a particularly hungry caterpillar, devouring everything in its path.
Tech Giants and Their Thirst for Power
Microsoft isn’t the only big beast clamoring for Nebius’s power. Meta Platforms has also signed a deal, worth $3 billion over five years. Nebius is keeping the exact number of megawatts under wraps, but securing deals with two such titans puts them in a very enviable position.
Research from Morgan Stanley suggests we’re heading for a rather nasty electricity shortage for AI data centers. They predict a 44-gigawatt shortfall by 2028, with existing sites simply not being enough. This means more companies will have to build data centers, and with energy being so scarce, Nebius can name its price. A delightful situation for them, I must say.
And there’s another wrinkle. AI data center providers are facing a shortage of skilled blue-collar workers. Before the AI boom, it was a problem, but now? It’s a full-blown crisis. New companies will struggle to build the infrastructure, while Nebius is already ahead of the game, having completed its projects and secured the energy supply. They are several years ahead of the competition. Tech companies are impatient creatures, you see. They won’t wait around for the supply to improve. They’ll pay a premium for Nebius’s power, fueling their AI ambitions. That, my friends, is a winning formula that could lead to a 10x return for Nebius stock.
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2026-02-17 20:02