Nebius Group N.V. NBIS is pursuing an aggressive capacity expansion strategy as demand for artificial intelligence (AI) infrastructure remains robust. The company spent nearly $5.7 billion in capital expenditures in the second quarter of 2026 on GPUs, GPU-related hardware and data center footprint expansion.
The sizable spending comes as Nebius expands its infrastructure footprint. The company has raised its year-end contracted power target to 5 gigawatts and plans to build more than 1 gigawatt of new capacity in 2027. Management also continues to expect 800 megawatts to 1 gigawatt of connected power in 2026.
Nebius reaffirmed the 2026 capex guidance of $20-$25 billion, underscoring the investment intensity required to support its growth ambitions.
Customer prepayments could help reduce the external financing burden associated with this buildout. Management noted that nearly 70% of second-quarter deals included upfront prepayments, and customer prepayments are expected to provide more than $9 billion of funding in 2026. The prepayment terms secured in the second quarter cover approximately 50%-60% of associated capex, thereby reducing dependence on debt and equity.
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Nebius also generated $2.3 billion in operating cash flow during the quarter with $8 billion in cash and cash equivalents as of June 30, 2026.
The company added that it will use various funding sources to fund capacity expansion. Under its at-the-market ("ATM") equity program, NBIS also issued 12.7 million Class A shares, generating gross proceeds of approximately $2.8 billion in the second quarter. NBIS considers ATM as a flexible funding tool. As of June 30, 12.3 million shares remain available under the program.
Further, Nebius is supplementing these sources with asset-backed financing. Management highlighted that its $775 million debt facility, priced at SOFR plus 250 basis points, is backed by deployed GPU infrastructure and contracted cash flows from an investment-grade customer. Management sees its roughly $40 billion committed backlog as supporting further asset-backed financing opportunities.
Overall, customer prepayments, operating cash flow and contracted backlog provide meaningful support for Nebius' elevated investment program. Still, the payoff hinges on execution, continued AI demand and the ability to scale profitably amid increasing competition from the likes of CoreWeave CRWV and tech giants like Microsoft MSFT and Amazon.
Capex Plans for Competitors
Microsoft is a structurally dominant force in the tech space. MSFT's capex spending dwarfs spending for both NBIS and CRWV. Fourth-quarter fiscal 2026 capex stood at $41 billion, with roughly two-thirds of that spend going toward short-lived assets, primarily CPUs and GPUs, and the rest was for long-lived assets. Management has guided capex to exceed $50 billion in the first quarter of fiscal 2027. The company projects the fiscal 2027 capex to increase year over year, supported by demand signals across its portfolio. Meanwhile, following a lease-accounting-related shift, Microsoft has now put its calendar 2026 capex expectation at approximately $175 billion.
Microsoft added 31 data centers across five continents during the quarter and another 1 gigawatt of capacity, while expecting to double overall capacity within two years.
CoreWeave is another rapidly growing AI infrastructure company. CRWV is aggressively expanding its AI infrastructure to meet increasing customer demand, necessitating massive capacity additions. 2026 capital expenditures are now projected to be between $35 billion and $39 billion (up from $31-$35 billion), indicating the scale of CoreWeave's AI infrastructure ambitions.
Capex was $9.4 billion, while construction in progress increased sequentially to $11.9 billion in the second quarter of 2026. Management noted that under a typical five-year contract, capex is front-loaded and requires a combination of debt, customer prepayments and other corporate-level capital to fund buildouts.
NBIS Price Performance, Valuation and Estimates
Nebius stock has lost 12% in the past month compared with the Internet – Software and Services industry's decline of 4.2%.
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NBIS' shares are trading at a 12-month forward price/sales multiple of 5.95X, above the Internet Software Services industry's 4.13X.
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The Zacks Consensus Estimate for NBIS' earnings for 2026 has been revised upward over the past 60 days.
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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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