Nebius surges 4% on Nvidia Physical AI Living Lab deal

Nebius Group partnered with Nvidia to build a Physical AI Living Lab, sending shares up more than 4% in pre-market trading.

Nebius Group's partnership with Nvidia to develop a Physical AI Living Lab confirms the neocloud provider's position as a credible challenger in the AI infrastructure race, sending shares up more than 4% in pre-market trading on Tuesday.

"This collaboration brings together Nvidia's full-stack AI platform with Nebius's vertically integrated infrastructure to accelerate physical AI applications," a Nebius spokesperson said.

The Physical AI Living Lab project will leverage Nvidia's Blackwell Ultra architecture and Nebius's proprietary software layer, targeting applications in robotics, autonomous systems, and industrial automation. The announcement follows Nebius's £1.7 billion UK expansion across four sites announced Monday, and comes as the company's revenue surged 684% year over year to $399 million in the first quarter of 2026.

The partnership deepens Nvidia's existing relationship with Nebius, which began with Nvidia's direct investment in the company during its December 2024 funding round. For Nebius, the deal adds a marquee collaboration to a portfolio that already includes landmark anchor contracts with Microsoft worth $17.4 billion and Meta worth up to $27 billion, giving the company a stronger claim on the AI infrastructure market projected to reach hundreds of billions in annual spending.

Physical AI Opens a New Revenue Front

Physical AI — systems that perceive, reason, and act in the physical world — represents the next frontier beyond generative AI. Applications include autonomous warehouse robots, self-driving vehicles, and industrial inspection systems. Nvidia has been pushing into this space through its Isaac robotics platform and Omniverse simulation tools. By partnering with Nebius, Nvidia gains a dedicated infrastructure partner that can deploy its full-stack AI factory platform at scale, while Nebius gains access to Nvidia's latest hardware and software ecosystem for a rapidly growing use case.

The timing is strategic. Nebius raised its 2026 capital expenditure guidance to a range of $20 billion to $25 billion to meet unprecedented infrastructure demand. The company is securing more than 1 gigawatt of total power capacity by the end of 2026, with a new Pennsylvania site of up to 1.2 gigawatts announced in May. This capacity positions Nebius to support both traditional AI training workloads and the compute-intensive simulation and inference demands of physical AI systems.

Investor Impact and Valuation Context

Nebius shares have rallied roughly 175% year to date, reflecting the market's appetite for AI infrastructure plays that can compete with hyperscalers like Amazon, Microsoft, and Alphabet. The company's core AI business segment posted an adjusted EBITDA margin of 45% in the first quarter, up from 24% in the prior quarter, demonstrating operating leverage as revenue scales.

Nvidia shares, trading at about 35 times forward earnings, were little changed in pre-market trading. The partnership is modest relative to Nvidia's $208 stock price and roughly $5 trillion market capitalization, but it reinforces Nvidia's strategy of embedding its full-stack platform across the AI infrastructure ecosystem rather than relying solely on GPU sales. For Nebius, the deal provides another proof point that its neocloud model — vertically integrated infrastructure with proprietary software — can attract marquee partners beyond its existing hyperscaler customers.

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