Shares in Nebius dropped sharply on Thursday following the company's decision to lower its revenue guidance for 2026 while simultaneously announcing substantially higher spending commitments. The Amsterdam-headquartered AI infrastructure provider's stock decline occurred despite delivering third-quarter results that exceeded market forecasts, with revenue climbing 571% year-over-year to reach $980.8m, surpassing the $907.5m consensus estimate from LSEG-surveyed analysts.

The company's profitability metrics showed marked improvement. Adjusted EBITDA reached $465.8m compared with a $5.2m loss in the same quarter last year, while net losses contracted to $37.5m from $119.6m, according to its financial statements.

Weaker 2026 guidance, stronger 2027 expectations

In his shareholder letter, founder and chief executive Arkady Volozh indicated that Nebius anticipates 2026 revenue at the lower boundary of its previously stated $3bn to $3.4bn range, falling short of the $3.37bn analysts had projected. The company's outlook for 2027 is considerably more ambitious, with management guiding for revenue between $12bn and $13bn.

The revenue reduction stems from postponements affecting data centre facilities that Nebius operates under lease arrangements with third parties. Capacity originally scheduled for delivery this year has been rescheduled to the first half of 2027, though the underlying customer contracts remain intact. Among the affected projects is a 300MW facility in Vineland, New Jersey, where power infrastructure delays have caused setbacks. Microsoft represents a significant customer for this location.

Building at this scale is hard, and delays are part of our industry right now. We are not immune. Customers have been kept informed and none of that capacity is cancelled.

Arkady Volozh

Volozh noted that all data centre sites under construction by Nebius itself are progressing on schedule or ahead of plan. He further indicated that the majority of capacity additions coming online in the near term will be sourced from Nebius's own facilities rather than leased infrastructure.

Capital expenditure plans surge to $45bn for 2027

Nebius has revised its 2026 capital spending estimate upward to approximately $27bn, compared with its earlier guidance of $20bn to $25bn. For 2027, the company is planning expenditures between $40bn and $45bn, substantially exceeding the $28.77bn that analysts had anticipated.

The company stated that customer prepayments and asset-backed financing mechanisms will underwrite 75% to 85% of 2027 spending. This financing strategy depends on existing agreements with major clients including Microsoft and Meta.

We have no doubt that this capacity will be sold. Clients are looking for capacity already for 2028, and prices for 2027 are going up. We do not see any risk.

Dado Alonso, chief financial officer

Management projects that Nebius will achieve pre-tax breakeven by the conclusion of 2027. In October, the company secured a $3.5bn loan from Citi.

The Nvidia connection

The timing of Thursday's share decline coincided with Jensen Huang stepping down as Nvidia's chief executive. As of the end of June, Nvidia held approximately $329m worth of Nebius shares. The broader context includes CoreWeave, a competing data centre operator, reporting earnings that exceeded expectations on Tuesday and announcing it would forgo new unsecured debt financing. Nebius had previously lost more than one-third of its market value in October amid investor concerns about the expenses associated with AI infrastructure expansion.

The demand for AI is real and substantial. Everything else, like building the capacity and financing it, is just a task.

Arkady Volozh, speaking on an analyst call

Source: The Next Web