Shares of Nebius Group (NASDAQ:NBIS) jumped again on Tuesday, after Palantir Technologies named the artificial intelligence (AI) cloud company its preferred partner for sovereign AI (AI that customers control themselves). That extended the stock's one-week gain to about 15% as of this writing.
Even after the run, shares trade around $244, about 19% below their 52-week high.
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But I can't think of another company this young that discloses this much about its future. Those disclosures are enough to sketch a realistic range three years out.
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More than $40 billion in signed contracts
Nebius has more than $40 billion in customer commitments (multiyear contracts for AI computing capacity). The list includes a Meta Platforms agreement worth up to about $27 billion, signed in March, and a $17.4 billion Microsoft deal signed a year ago.
And the deals keep getting richer. In the second quarter, Nebius closed four contracts averaging more than $1 billion each, at $20 million to $25 million per megawatt in annual contract value. That's well above its stated 2026 base of about $12 million per megawatt. And about 70% of the quarter's deals included prepayments covering 50% to 60% of the related capital spending.
The signed demand is flowing into reported results, too. Not only did second-quarter revenue rise 454% year over year to $582.3 million, but Nebius also swung to non-GAAP (adjusted) earnings before interest, taxes, depreciation, and amortization (EBITDA) of $236.2 million, a 41% margin, up from a loss a year earlier. It still posted an adjusted net loss of $33.2 million, narrowed from $91.5 million a year ago. And its annualized run rate (the latest month's AI cloud revenue times 12) climbed from $1.25 billion in December to $1.9 billion in March to $3.0 billion in June.
Management's guidance calls for a run rate of $7 billion to $9 billion exiting 2026.
The build-out is already diluting shareholders
Nebius expects to end 2026 with 5 gigawatts of contracted power and plans to bring more than 1 gigawatt online every year starting in 2027. Contracted power, of course, means land and electricity secured, not computing capacity up and running.
The bill arrives first. After all, Nebius spent about $8.1 billion on capital expenditures in the first half of 2026 alone.
To keep building, the company ended June with $8.0 billion in cash and raised another $5.75 billion in convertible notes in late August. It also swapped some older convertible notes for about 15.8 million new shares.
That's the dilution I can already count. The August notes convert at prices around $313 and $325 per share, good for up to about 18 million additional shares -- on top of the roughly 272 million outstanding at the end of June, a count the swap has already pushed higher. In short, the count should keep climbing while the spending runs years ahead of the contracted revenue.
What could the stock be worth in 2029?
I'll assume Nebius hits its guided range this year and brings 500 megawatts to 1 gigawatt online each year through 2029 -- slippage at the low end, the plan at the high end. I'll also price that capacity at $9 million to $20 million per megawatt of annual revenue, from below the 2026 base to near the latest deal pricing. That puts the run rate at the end of 2029 between about $20 billion and $70 billion.
What the market pays for that revenue matters just as much. Today the stock's valuation is more than 20 times run-rate revenue. A slower-growing, capital-heavy builder could fetch 2.5 to 3 times run-rate revenue, while a business still compounding could arguably hold 4 times run-rate revenue.
I'll call the share count 330 million to 400 million by then, with more dilution in the harsh case. Run the numbers, and the range comes out to about $125 per share on the harsh end and $835 on the generous one. The middle lands in the $300s, ahead of today's price but not by as much as the growth rates suggest.
All of those assumptions are arguable. But one matters most: the price of a megawatt.
At $20 million or more per megawatt, the model works, with prepayments funding much of the build. If pricing sags toward $10 million as the industry's capacity arrives in 2028 and 2029, the same gigawatts produce half the revenue and the low end of my range comes into play.
So, where will Nebius stock be in three years? Probably somewhere inside that wide range.
Ultimately, I don't think today's price leaves enough cushion for how wide it is, so I'm staying on the sidelines for now. If per-megawatt pricing is still holding once the industry's 2027 capacity comes online, I'd take another look.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, and Palantir Technologies. The Motley Fool has a disclosure policy.
