Racing Against the Clock: How Nebius Is Tackling AI Infrastructure's Toughest Challenge

The artificial intelligence infrastructure race is heating up, and Nebius Group N.V. (NBIS) finds itself caught in a critical crossroads. While demand for GPU capacity and power continues to explode, the company’s ability to scale fast enough remains the defining obstacle holding back revenue potential.

The Core Challenge: When Demand Outpaces Supply

During Q3, Nebius demonstrated the market’s hunger for AI compute—every unit of available capacity sold out instantly. The trend persists: fresh capacity allocations are absorbed the moment they go live. With NVIDIA’s latest Blackwell chips reaching production maturity, enterprise customers are now locking in longer-term commitments and planning purchases further ahead. Yet this unprecedented demand has exposed a fundamental constraint: infrastructure simply isn’t materializing quickly enough to meet orders.

Management has been candid about this limitation. The company recognizes that its growth ceiling is not driven by commercial factors, but by sheer physical capacity constraints. To break through this wall, Nebius has unveiled an aggressive infrastructure roadmap. By the close of 2026, the company targets 2.5 GW of contracted power capacity, nearly triple the 1 GW baseline from August. Critically, Nebius also aims to have 800 MW to 1 GW of power actively connected and operational at its data centers by year-end 2026—a substantial leap from current levels.

Capital Mobilization at an Unprecedented Scale

Turning these ambitions into reality demands extraordinary financial firepower. Nebius has dramatically raised its 2025 capital expenditure guidance from $2 billion to $5 billion, signaling management’s confidence in market opportunity and determination to secure critical resources. This investment encompasses power infrastructure, hardware procurement, land acquisition, and securing geographically strategic sites.

To finance this expansion, Nebius is tapping multiple funding channels: traditional corporate debt, asset-backed securitization arrangements, and equity capital. This multi-pronged approach reflects both the scale of required investment and the company’s access to capital markets.

Revenue Trajectory and ARR Milestones

The financial impact is already visible in Nebius’s revised 2025 guidance. Full-year group revenue is now projected at $500–$550 million, adjusted downward from the prior $450–$630 million range. While this appears conservative, management attributes the tighter band primarily to timing delays in capacity activation rather than demand weakness. The company remains on course to hit $900 million to $1.1 billion in Annual Recurring Revenue (ARR) by year-end 2025, with ambitions to reach $7–$9 billion ARR by the end of 2026.

The Competitive Landscape Intensifies

Nebius is not alone in this infrastructure arms race. Microsoft (MSFT) is aggressively expanding its AI footprint, announcing plans to boost total capacity by over 80% during 2025 and roughly double its data center footprint over the next two years. For Q2 fiscal 2025, Azure is expected to grow approximately 37% in constant currency, yet Microsoft too expects to remain capacity-limited through the fiscal year end. This signals that even tech giants face infrastructure constraints—a telling indicator of the industry’s explosive demand.

CoreWeave, Inc. (CRWV) has similarly ramped its operations by leveraging product innovation, deep customer relationships, strategic partnerships with major cloud providers, and emerging federal contracting opportunities. However, CoreWeave is equally supply-constrained, with customer demand vastly exceeding available resources. Supply chain delays from data center partners are projected to impact Q4 results, prompting the company to reduce its 2025 revenue outlook to $5.05–$5.15 billion (from $5.15–$5.35 billion) and adjust operating income guidance to $690–$720 million.

Market Sentiment and Valuation Metrics

Investors have rewarded Nebius shares with a 144.2% surge over the past six months, substantially outpacing the Internet – Software and Services industry’s 6.9% gain. From a valuation standpoint, NBIS trades at 4.66X price-to-book, a discount to the broader sector’s 39.95X multiple, suggesting potential upside if execution meets expectations.

However, analyst consensus has shifted slightly bearish. Zacks consensus earnings estimates for 2025 have declined over the past 60 days, and the stock currently carries a Zacks Rank #4 (Sell) rating. This divergence between stock price momentum and analyst sentiment underscores the inherent risks in high-growth infrastructure plays.

The Road Ahead

Nebius’s near-term fortunes hinge on two critical factors: successfully securing reliable power supplies and stabilizing its supply chain for infrastructure components. The infrastructure market is rapidly consolidating around a handful of major players, creating pricing pressures and limited differentiation. As the AI compute market matures, competition from established technology firms and emerging challengers will only intensify, compressing margins and forcing continued investment to maintain competitive positioning.