Marcel, excellent breakdown. I think the market is significantly underestimating $NBIS pricing power and what Vera Rubin could mean for revenue per MW. If demand continues outstripping supply, even these seemingly aggressive ARR projections could prove conservative. I won’t get caught up in the price targets. But the ARR numbers are very feasible.
$NBIS
My Nebius bull case, rebuilt around the scenario I think is most likely after today.
What came out of GTC Berlin:
Nebius's CRO told CNBC that AI compute prices keep rising faster than Nebius expected, that yesterday's capacity auction cleared higher again, and that Nebius could sell all of its planned 2027 capacity immediately at current prices. It's holding some back on purpose. Customers are asking for capacity "further and further out," he said 2028 could look the same, and supply "continues to fall far behind demand." Nebius also put its GPU spot prices online today. And Jensen named Nebius as an example of why neoclouds exist, because "every region wants to participate in the AI economy," and said "Startup companies like Nebius is doing incredibly well."
What a MW of AI compute earns right now:
• Jensen: a GW costs ~$50B and generates ~$40B a year, so ~$40M per MW
• SpaceX: slightly above $50 per watt, with payback under a year
• CoreWeave's 3-6 month deals in Q3: ~$40M per MW
• Nebius: $40-50M/MW short-term, $20-25M on its 1-3 year Q2 deals
Why I expect Nebius's late-2027 and 2028 deals to price well above Q2:
• The auction keeps clearing higher, and Nebius raised on-demand GPU prices 17-21% on Oct 1
• Musk on why SpaceX sticks to short-term contracts: "We see them renewing at higher dollars per watt, not lower dollars per watt," with H100s "renting for more than they rented when they were new"
• Vera Rubin is "in full production" and, per Jensen, "30 times greater than Blackwell," so a MW of Rubin does far more work than a MW of Blackwell
• Micron expects memory supply to be "much tighter in calendar 2027 and 2028 than they were in 2026," and every GPU needs HBM
• Under the Meta deal, Nebius offers up to $15B of capacity to other customers first and Meta buys whatever is left, so Nebius can sell it at market prices and still has a buyer of last resort
My base case:
• Management's capacity plan: ~0.9 GW by year-end, ~1.9 GW by end of 2027, ~3.1 GW by end of 2028
• This year's capacity at ~$12M/MW once fully live
• New 2027 capacity at ~$25M/MW, long-term deals at $20-25M plus the held-back part sold higher
• 2028 deals at ~$30M/MW, still 25-40% below today's short-term rates. Nebius keeps selling long-term at a discount because those deals come with prepayments that fund the build
That gives exit-2027 ARR of ~$29B, 2028 revenue of ~$42B and EBITDA of ~$27B, with payback on new capacity down from 22 months to ~18. Valued at 10x next year's EBITDA, that's ~$700 by end of 2027. At 9x, it's ~$1,100 by end of 2028. That's about 20x and 15x forward earnings, with converts counted as shares once in the money.
Stress tests on that:
• New deals stuck at Q2 pricing: ~$560 by end of 2027
• Every MW six months late: ~$540
• 8x EBITDA instead of 10x: ~$560
Bull case, with all 5 GW of contracted power online by 2029 and new deals at ~$40M/MW by 2028: ~$1,050 by end of 2027 and ~$1,800 by end of 2028.
What the market pays today: about 4x consensus 2027 revenue of $12.3B and ~1.7x the ARR I expect at the end of 2027, with Street 2027 EPS still negative.
How it's funded: $8.0B of cash at June 30, $5.75B of converts in August ($3.45B at 0.50%), $9B+ of prepayments expected this year with ~70% of Q2 deals prepaying 50-60% of capex, and one secured facility of $775M.
Track record:
• ARR went from $1.9B to $3.0B in one quarter
• Q2 deal value grew nearly 4x
• Every Microsoft tranche delivered
• Platinum in SemiAnalysis's ClusterMAX, a tier it shares only with CoreWeave
• First AI cloud to adopt Groq 3 LPX, and Token Factory inference workloads more than tripled in Q2
Much of today's price is CoreWeave's bonds. Nebius fell 25.2% last week, about as much as CoreWeave, without having publicly traded CDS.
I'm long $NBIS. It's my biggest position.
@EndicottInvests @daniel_koss @Sandeman52 @SMASIMHO I'd value your take, especially on the pricing. A repost helps if you think it's worth reading.
$NBIS Been buying the dip for my kids account last 3 days. Let’s see what this looks like next week. Then, after earnings.
The red does not concern me. The news from Berlin GTC was ultra bullish.
SandemanStocks retweeted
$NBIS now trades at 0.66x 2027 ARR.
Bargain of a century.
Market cap is currently $43B.
Deduct $10B for subsidiaries like ClickHouse.
So $33B for the AI Cloud, which will hit ~$10B ARR this year.
They will bring more than 1GW online in 2027.
But let's assume just 1GW.
They could currently sell that capacity for $40-50B.
Let's assume some of it is already assigned at lower prices and some will be sold at higher spot prices.
So, to keep it simple, let's just take the lower end and assume they'll make $40B from it, plus $10B from existing deals and capacity.
Cloud business at $33B while hitting $50B ARR.
So $NBIS is trading at 0.66x next year's ARR.
We are in PEAK FEAR and AI DENIAL right now, NOT bubble territory.
Whoever says Nebius is expensive is outing themselves as clueless.
This is the bargain of a century.
I remember when I traded bio stocks.
A positive PR would drop. Everyone expected a huge pop that day and usually got the opposite. Many got frustrated and sold.
Only to see later that day or a few days later a delayed pop.
Hmmm I wonder why that happens. 😏
$NBIS CRO Marc Boroditsky told CNBC at GTC Berlin that Nebius could sell all its planned 2027 capacity immediately at current prices….but is holding out for higher prices.
So what does that mean? 10% more? 35% more? 50% more?
Nebius already disclosed $20 to 25M in annual revenue per MW on its large cloud deals.
So what price is Marc implying here? 👀
2027 exit ARR could shock people.
No, sorry, it WILL shock people.
In Arkady we trust.
$NBIS
main thing is, if we have the demand, all the rest are not problems, they're tasks."
- Arkady
Financing, building, sourcing chips: all tasks. And with one of the best management teams in the industry, those tasks get done smoothly, always with an eye on the next step.
The demand is there, and boy oh boy, it's far outstripping supply.
Bullish!!
“Our belief is that the value of compute per watt will increase over time, not decrease.”
-Elon Musk
Elon Musk just SAVED the neocloud trade.
Elon “Our belief is that the value of compute per watt will increase over time, not decrease. And the reason that for that, I think it should be obvious to people really is that as you improve the AI software, as the models get better and better, they're able to you get more useful intelligence per watt. And the value of that compute is proportionate to the useful intelligence per watt. And that's why you see things like even old computers like H100s renting for more than they rented when they were new. And I think that's likely to continue. I think we're going to face a shortage of superintelligence compute”.
Pretty much everything in the $SPCX earnings call destroyed the SI bear thesis. I’m speechless.
$META up next.
Holy smokes!!!!
$SPCX says Q4 capex will be $35-40 billion versus $18-19 billion from sell-side estimates.
Elon also says they can bring on 10 GW of compute in 2027 in addition to the 2.5+ GW they expect to have by the end of 2026.
This means $SPCX capex in 2027 could be $300-400B billion (ie $30-40B per GW) vs current sell-side estimates of $165B.
From Elon… “At current pricing, new compute deployments are generating a payback of less than a year. Pricing is currently tracking slightly above the high end of the $30 to $50 per watt range we were discussing just last quarter, which further supports the attractiveness of these terrestrial SI compute investments.”
From Elon… "I think the demand for bandwidth is going to be dramatically higher than it is today. I think in three to five years there is probably a demand for 1,000 times more bandwidth than there is currently, because AI or SI agents will on a per-agent basis use far more bandwidth than a person, and there will be far more agents than there are people... With next year being primarily Rubin, I would say I am fairly confident of being able to bring an incremental 10 gigawatts of compute online in 2027. That would be in addition to the roughly 3 gigawatts, maybe 2.5 to 3 gigawatts that we will have online by the end of this year. Let me put it this way. I would be surprised if we brought on less than 13 gigawatts of compute by the end of next year."
…and to think that some of you are bearish on ai infrastructure 🙄 while the clowns at Gartner think demand is lagging supply 🤣
SandemanStocks retweeted
Guys I found my soul mate. You all know I have my $NBIS Data Center Tracker.
Guess what @anthonybs created?
A $NBIS Customer Tracker. My favorite discovery? What a CRAZY CAC funnel Tavily is.
Where else do you see such a talented community of builders? Well, like father (Nebius) like son (Nebians).
This guy has more data pipelines and validation workflows running than a small business.
Seriously, check it out. You'll be surprised.
nebiusatlas.com
SandemanStocks retweeted
Powerful bull markets generally come after massive destruction of leverage before huge run-ups.
Prolonged bear markets generally don't start with sentiment in the absolute dumpster.
The goal is to survive, not get liquidated or shaken out, and practice emotional regulation.
The FUD is a constant drip when the fear is high.
$NBIS has not reported one negative thing since this drawdown. It’s been guilty by association. Sure, borrowing costs are going up…if you are not creative with your borrowing strategy (but they are).
Demand keeps going up. Look at the spot pricing. There is no real prediction when demand slows despite what FUD narratives try to tell you.
Sentiment is total sht… that for sure. But sentiment is not math. When mag 7 start reporting let’s see what happens.
More importantly when $NBIS reports earnings, that’s what really matters.
Bullish narratives get over done. But so do bear ones. I’ll be patient.
Spot on. Volatility decreases the more you zoom out. Plus once the Iran thing ends I think HF will stop being so schizophrenic.
I’m starting to think half the HF industry has developed ADHD.
High conviction on Monday, panic selling by Thursday. Nothing material changed at the co.
For all their resources, leverage, risk limits and obsession w/ qrtly performance have turned a lot of them into incredibly impatient investors.
And I think that’s a massive advantage for retail.
If you can afford to sit tight while the supposed professionals lose their shit, you have an edge they simply don’t.
Stock market preview. Did @elonmusk flip SI/AI sentiment last night with the below tweet?
Quarterly FUD campaign is over. They got what they want. I hope you didn’t fall for it for the 10th time.
I don’t own any $CRWV but yeah, the FUD caused in the last week was out of control.