Nebius Earnings: GPU Spot Prices Triple and Neoclouds Exploit Short-Term Scarcity

Key Morningstar Metrics for Nebius Group

• : $150.00
• : ★★

• Morningstar Economic Moat Rating

  : None

• Morningstar Uncertainty Rating

  : Very High

What We Thought of Nebius Group’s Earnings

Our key takeaways from Nebius Group’s NBIS second-quarter call are that GPU spot rental rates continue to climb as the artificial intelligence supply/demand imbalance intensifies and neoclouds want to maximize value extracted from short-term pricing.

Why it matters: Average contract value per megawatt has more than tripled in the year to date, from an average of $12 million/MW in early 2026 to $20 million/MW in the second quarter, and some third-quarter contracts are being signed at $40 million/MW. We think management is avoiding long-term capacity commitments, favoring three-to-six-month contracts, as it believes GPU spot rates will continue to climb, allowing a massive pricing tailwind in late 2026 and 2027.

• Quarterly revenue grew 454% to $582 million with a negative 30% operating margin. We estimate higher-priced contracts will have a significant positive impact on profitability in late 2026 and 2027. This massive pricing tailwind is supply/demand driven, not driven by any durable differentiation, and we remain cautious about assuming such pricing persists into perpetuity. Once the imbalance eases, the pricing situation would play in reverse.

The bottom line: We raise our fair value estimate for no-moat Nebius to $150 from $120, reflecting higher GPU rental prices in the next three years, improving operating margins, and reducing the free cash flow burn. We estimate Nebius will burn close to $30 billion in free cash flow in the next five years, requiring continued equity and debt raises.

Big picture: Nebius’ thesis shows reflexive elements because its valuation partially shapes its fundamentals. A high share price is a platform for future growth with less dilution, faster buildouts, and stronger investor sentiment. But if sentiment weakens, the loop can reverse—cost of capital rises, dilution increases, and fundamentals might deteriorate. Nebius needs to maintain a high share price to keep growing, and an AI spending slowdown would hinder its ability to attract new capital and grow.