I have tremendous faith in Nebius (NBIS), having owned it since last April and now it's my 4th largest holding and 5% of my portfolio. This quarter confirmed that its story keeps getting better and better. Here's my previous article on Nebius (NBIS) waxing eloquent about their progress.

December 2025 quarter highlights.

Nebius delivered strong financial results this morning. 

• ARR (Annual Recurring Revenue) as of year-end was $1.25Bn, beating its most recent guidance of $900 million to $1.1 billion by a whopping 25% at mid-point.​
• Adjusted EBITDA turned positive in Q4, reflecting operating leverage from scale and cost discipline through- out the year.
• Delivered ahead of plan with 170MW of active power again beating its target of 100MW.
• Reiterated ARR of $7Bn to $9Bn for 2026. I believe they will exceed this easily.
• Guided to $3.2 to $3.4Bn in 2026 revenues.​
• The pipeline creation trajectory in Q1 on track to exceed $4Bn

Reasons to invest in Nebius

Strong execution experience: This is a global company rapidly expanding its infrastructure with deployments in five new locations globally. Another nine are on the anvil. With its tremendous experience world-wide in data center ramping up and execution with a strong team of over 1,200 people and two-three decades of experience​, Nebius is my favorite AI cloud native pick. And while its size is still puny compared to Amazon Web Services, Microsoft Azure and Google Cloud, it will in a short span of 5 years be a strong competitor for AI cloud native services. Self-developed, self-executed projects – from the ground up, much more efficient and economical.

Full Stack: Nebius has no desire to get into the bare metal AI rack provider business, instead it has a full stack of AI offerings including the Token Factory to capture startups, and enterprises looking for complete AI solutions. This quarter it diversified its AI cloud customer portfolio by adding several large startup and enterprise logos. As a full stack AI cloud service – In the long run, it can get as valuable as Amazon Web Services, Google Cloud, and Azure. I believe the model to serve enterprises will change completely and Nebius will be a lot more than a bare metal provider for compute. It has a lot more complexity and has layers of valued added services. 100% of its AI cloud customers are utilizing Nebius' AI cloud software, and its expects the Token Factory and the Aether releases to further open up the TAM.

They are delivering ahead of schedule​: It secured 2GW of contracted power already, indicating that it would be well ahead of 2.5GW target set for Nov 2026. As a result, Nebius increased guidance to 3GW by the end of 2026. Power is the biggest constraint for datacenter operations and over achieving targeted power is amazing. It is also well on track to reach 800 MW to 1 GW of connected power by the end of 2026.​ It delivered the first tranche of capacity to Microsoft on time in November 2025 and is well on track to deliver the remaining capacity on schedule. (For context, they have a $17-$19Bn contract with Microsoft over 5 years)​. It delivered both contracted tranches to Meta on time and are now fully in the servicing stage. ($3Bn contract with Meta, also on schedule. By contrast biggest competitor Coreweave (CRWV) was behind schedule by a quarter.​

Strong demand: Demand from enterprises and AI native customers continues to outpace supply, Nebius is selling future capacity well in advance, capacity is sold out before it brings it online. As a result, the average contract duration of new cloud customers grew by 50% and the prices of GPUs didn't fall even on previous generations of GPUs as the industry may have expected.

Diversified clientele: Nebius’ focus on non hyperscaler clients is very strong and they're going to expand that significantly in the next two years. Their demand quickly grows from hundreds of GPUs to tens of thousands. Startups clients like Cuckoo, Cursor, Rodo, Higgsfield, Photoroom, Genesis Molecula, have become real businesses with real revenues. And on the other hand, there is enterprise clients who involve more -- who actually​ switching most of their everyday business process to AI and generate new profits through that AI implementations. ​ We see the growing number of such customers, growing contracts from each of such a customer, the number of GPUs is growing, the duration of the contracts is growing. ​

New Agentic Search capability: The recent acquisition of Tavily, adds generic agentic search capabilities for customers and also brings almost 700,000 developers into Nebius' ecosystem​

Strong Pricing : Average selling prices increased by 50%, including renewals for Hoppers which are the previous generation.Nebius' focus on providing customers with premium workloads and use cases, is paying off with superior terms, including prepayments for securing future capacity, and larger and longer contracts, simply everything it builds it sells.​

​Capex $16Bn to $20Bn is the main challenge.

How do they plan to raise capital?​

• Internal cash generation – Quarterly operating cash in Q4 was $874Mn​
• Prepayments – Clients are willing to prepay to book capacity​
• Current cash on hand - $3.7Bn​
• Its can sell its 28% stake in Clickhouse stake, which is valued at $15Bn.
• I don't believe that Nebius would need to raise more than 40% of Capex from debt or new equity.​

Reiterating Buy