Nebius (NBIS) Has Pricing Power. Its Earnings Don’t Show It Yet.

Cloud companies don’t usually raise prices. Competition in renting out computing power tends to push the other way, with each new chip generation cheapening the last. Yet at the start of this month, Nebius Group (NASDAQ:NBIS) reset compute prices on its NVIDIA B300, B200, H200, and H100 virtual machines, the exact hardware AI developers are scrambling to rent.

Nebius runs a cloud built specifically for artificial intelligence. It buys NVIDIA GPUs, installs them in data centers across Europe and the US, and rents that capacity to AI labs, start-ups, and tech giants such as Microsoft and Meta. Customers either pay as they go or sign multi-year contracts for dedicated capacity, a surge in infrastructure demand that has turned Nebius into one of the 12 High-Flying Stocks to Invest In. The harder question is whether pricing power can outrun the enormous bill for building it, and the answer hinges on a forecast that looks, at first glance, like bad news.

Nebius (NBIS) Has Pricing Power. Its Earnings Don't Show It Yet. — Nebius (NBIS) Has Pricing Power. Its Earnings Don’t Show It Yet.

Scarcity Is the Moat

Nebius doesn’t sell patent-protected technology. Its edge is something AI customers currently prize more: GPUs that are powered, networked, and ready to use. Power and data center space have become the scarce inputs in AI, and Nebius has moved aggressively to lock them up. It expects to end 2026 with 5 GW of contracted power and plans to deploy more than 1 GW a year starting in 2027.

The proof shows up in pricing. In its second-quarter 2026 shareholder letter, the company said pricing for older-generation GPUs rose more than 30% from the first quarter, and deals signed in the quarter averaged above $20 million in revenue per MW. In recent weeks, Nebius also introduced spot pricing for preemptible machines, letting the price of spare capacity float with demand.

Growth With Leverage Built In

Second-quarter 2026 revenue reached $582.3 million, up 454% from a year earlier. Annualized recurring revenue (ARR, the current revenue pace stretched over a full year) hit $3.0 billion at the end of June, up from $1.9 billion at the end of March. Adjusted EBITDA swung to $236.2 million, from a $21.0 million loss a year earlier.

Costs are scaling more slowly than sales. Cost of revenue fell to 23% of revenue from 29%, and SG&A dropped to 30% from 65%. That operating leverage sets Nebius apart within a fast-growing group of 11 AI Stocks That Will Go to the Moon, challenging the hyperscalers.

Demand looks locked in, too. Nebius has more than $40 billion in customer commitments. It delivered every contracted capacity tranche to Microsoft and is working on a second agreement with Meta.

Is the Buildout Outrunning the Business?

Nebius spent $8,130.3 million on property, equipment, and intangibles in the first half of 2026 alone, and total debt stood at $8,545.7 million at the end of June. Interest expense jumped to $119.1 million in the quarter from $4.8 million a year earlier, while depreciation climbed to $259.7 million from $75.2 million. The upshot was a GAAP net loss from continuing operations of $190.4 million.

The company has leaned on shareholders, too, raising roughly $2.8 billion by selling stock through an at-the-market program, even as news that Nebius Group (NBIS) plans to hike prices sent shares rocketing on strong cloud GPU demand. And with Microsoft and Meta anchoring so much of the demand story, a pullback by either would leave a hole that’s hard to fill, a concentration risk common among AI infrastructure stocks.

Prepayments soften the blow. About 70% of second-quarter deals included them, covering 50% to 60% of the related capex, and Nebius expects more than $9 billion in customer prepayments in 2026. But the company is still betting its balance sheet on demand staying tight.

Paying Up for Shrinking Earnings

At 46.08 times forward earnings, as of October 9, Nebius trades well above the sector’s 23.23 multiple. Investors usually pay that kind of premium for earnings that are about to grow fast.

Instead, analysts expect earnings per share to fall 62.73% in 2027. That forecast reflects timing more than fading demand: most second-quarter deals are tied to capacity arriving in late 2026, so the depreciation and interest land before the revenue fully does. Even so, a premium multiple on shrinking earnings means you’re paying today for profits that sit years out, and the contrast with cash-rich cloud giants like Amazon shows how much faith that takes.

Sentiment reflects the split. Short interest stands at 19.81% of the float, a sizable bet against the stock. Hedge funds moved the other way, with 87 holding Nebius in the most recent quarter, up from 70 in the prior one.

Where the Evidence Points

Nebius’s pricing power is real, and the backlog suggests demand isn’t fading. But at this multiple, the stock already assumes a smooth handoff from a costly buildout to fat profits, just as earnings are expected to shrink. The setup suits investors comfortable with sharp swings who believe AI compute stays scarce through 2027. Softening GPU pricing, or trouble funding the next gigawatt without heavy dilution, would weaken the case quickly.

While we acknowledge the risk and potential of NBIS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NBIS and that has 10,000% upside potential, check out our report about this cheapest AI stock.

Disclosure: None. Follow Insider Monkey on Google News.

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