Nebius Group (NASDAQ:NBIS) stock is pushing higher again in Thursday’s session after the neocloud company’s latest quarterly statement featured a massive increase in sales. Year-to-date, the stock has gained 166%.
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Forget margin or options. Here's how the pros trade NBISRevenue came in at $399 million, up 684% year-over-year and ahead of expectations by $10.43 million, driven by continued strength in artificial intelligence spending. Meanwhile, Nebius AI Cloud revenue reached $389.7 million, marking an 841% YoY increase. ARR rose to $1.9 billion, up more than 50% quarter-over-quarter.
Gross margin expanded 417 basis points sequentially to 74.1%, well above the consensus estimate of 66.1%, while also improving by 2,227 basis points vs. the year-ago period. The performance was likely driven by strong pricing for new contracts and on-demand capacity, helping lift adjusted EBITDA to $130 million, roughly $30 million above Street expectations and a significant improvement from the $53.7 million loss recorded a year ago.
NBIS also increased its FY26 CapEx guidance by $4.5 billion at the midpoint to a range of $20 billion to $25 billion, based on visibility into FY27 demand rather than component costs, while maintaining the outlook for FY26 revenue, ARR, and EBITDA margin. The company said active capacity remains sold out, with demand continuing to support GPU price hikes across all generations.
Given the apparent impact pricing trends had on March quarter profitability, Northland analyst Nehal Chokshi, who ranks among the top 2% of analysts on Wall Street, believes the “vast majority” of the roughly $675 million in incremental ARR came from higher-margin, less price-sensitive non-hyperscaler customers, such as AI-native companies and large enterprises. The company also disclosed that it had contracted 3.5GW of power capacity, surpassing the company’s previously communicated target of 3GW by the end of CY26.
As such, Chokshi raised his CY26 ARR estimate to $8 billion, within management’s guidance range of $7 billion to $9 billion, up from his prior forecast of $5.4 billion. The 5-star analyst said the increase reflects the strong demand environment Nebius is seeing, particularly from higher-margin non-hyperscaler customers, after the pipeline expanded 3.5x quarter-over-quarter.
Chokshi reckons the non-hyperscaler pipeline is approaching $16 billion in ARR, supported by the reiterated CY26 ARR target, which is expected to derive roughly 50% from non-hyperscaler customers, alongside management’s statement that there are about four customers competing for every GPU deployed. Chokshi also said Nebius outperforming on contracted power supply and increasing its CY26 targeted contracted power capacity to 4GW gives him “incremental confidence” that supply expansion is progressing faster than previously reflected in his mid-term forecasts.
Bottom line, Chokshi continues to believe that NBIS is “innovating faster on the software front relative to other AIaaS peers,” and that merits a price target hike from $215 to $248, implying the stock will gain another 10% in the months ahead. Chokshi’s rating stays an Outperform (i.e., Buy). (To watch Chokshi’s track record, click here)
8 other analysts are also NBIS bulls, while 2 additional Holds can’t detract from a Strong Buy consensus view. However, the gains have sent the shares 11% above the $200.5 average price target. As such, keep an eye out for further price target increases, or rating revisions shortly. (See NBIS stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.