Nebius surges 230% in H1 2026 on Nvidia investment and earnings beat

Nebius Group shares surged 230% in the first half of 2026, as a strategic investment from Nvidia and an 841% jump in AI Cloud revenue transformed the neocloud company into one of the year's best-performing tech stocks.

Morningstar assigns Nebius a fair value estimate of $120 a share, less than two-thirds of the current trading price, reflecting the gap between the company's GAAP profitability — driven by a $780.6 million non-cash revaluation gain — and its widening adjusted net loss.

AI Cloud revenue reached a record in the first quarter, rising 841% from a year earlier to an undisclosed dollar amount, with adjusted EBITDA margins of 45%. The company guided for $7 billion to $9 billion in annualized recurring revenue exiting 2026, up from a $1.25 billion run rate at the end of 2025. Remaining performance obligations stood at $33.59 billion.

The 230% rally has pushed Nebius's market capitalization to $54.7 billion, but the stock remains highly volatile — it dropped 18% in a single week in July after Meta Platforms announced plans to build its own cloud business. With $10 billion in convertible debt and $9.9 billion in future data center lease obligations, the company carries a balance sheet that demands continued execution.

The Nvidia investment, announced in the first half of 2026, served as a powerful endorsement for Nebius's neocloud model. Nvidia, which dominates the market for AI training chips with an estimated 80% share, typically invests in infrastructure partners that can deploy its GPUs at scale. The deal gave Nebius preferential access to Nvidia's latest hardware, including the Blackwell architecture, at a time when GPU supply remains constrained and lead times for H100 and B200 chips stretch several months.

Nebius's customer roster now includes two of the largest technology companies in the world. Meta Platforms committed $27 billion in contracts, while Microsoft pledged $17 billion, according to the company's disclosures. Those anchor tenants provide the revenue visibility that allows Nebius to invest aggressively in data center capacity — the company is building out multiple facilities across Europe and North America, with total planned capacity exceeding 500 megawatts.

The earnings report in May crystallized the market's enthusiasm. Beyond the headline revenue growth, the company demonstrated that its infrastructure investments are beginning to generate operating leverage. The 45% adjusted EBITDA margin suggests that Nebius can scale profitably even as it continues to spend heavily on capacity expansion. The company's guidance implies a 5x to 7x increase in annualized recurring revenue by year-end 2026, a trajectory that would put it among the fastest-growing infrastructure companies in the sector.

Yet risks remain substantial. The stock trades at 68 times forward earnings and 62 times sales, multiples that leave little room for execution missteps. The adjusted net loss widened 20% year over year to $100.3 million in the first quarter, and the company's $10 billion in convertible debt creates potential dilution for shareholders. The 52-week range of $43.89 to $299.86 captures the extreme volatility that neocloud stocks have exhibited, with the stock losing nearly a fifth of its value in a single week after Meta announced plans to build its own cloud business.

For investors, Nebius represents a high-conviction bet on the AI infrastructure buildout, but one that requires a long time horizon and tolerance for sharp drawdowns. The company's revenue trajectory and blue-chip customer base provide a foundation that few neocloud peers can match. But the valuation — 62 times sales for a company that is still generating operating losses — leaves no margin for error. The Nvidia partnership and $44 billion in committed contracts from Meta and Microsoft give Nebius a path to profitability, but the market is pricing in near-perfect execution.

This article is for informational purposes only and does not constitute investment advice.