The Amsterdam based AI infrastructure company reported a 355 percent revenue increase and secured its second major hyperscaler contract following Microsoft
Nebius Group announced Tuesday a $3 billion agreement to supply Meta with artificial intelligence infrastructure over five years, reinforcing the explosive demand for computing power needed to develop and operate AI systems. The deal comes as the company reported third quarter revenue that jumped more than fourfold compared to last year.
The announcement triggered volatile premarket trading as investors digested both the major contract win and troubling financial metrics. Nebius posted a quarterly loss exceeding $100 million, significantly wider than the $39.7 million loss recorded in the same period last year. Capital expenditures ballooned to $955.5 million in the September quarter from $172.1 million a year earlier as the company invests aggressively in securing graphics processing units, land and power infrastructure.
Despite the losses, Nebius shares have enjoyed a remarkable run this year. The company’s market value has quadrupled to $27.61 billion through the most recent close, reflecting investor enthusiasm for businesses positioned to capitalize on the AI boom.
Nebius expands hyperscaler partnerships
The Meta agreement represents the second major hyperscaler contract for Nebius following its $17.4 billion deal with Microsoft announced in September. These partnerships underscore how even technology giants struggle to secure sufficient computing capacity to meet their AI ambitions.
Nebius indicated it would deploy the necessary capacity for the Meta contract within the next three months. Company officials noted that demand proved so intense that they had to limit the contract size to match available capacity, suggesting the deal could have been even larger if infrastructure allowed.
The Amsterdam based firm operates as part of a growing group of neocloud companies that provide hardware and cloud capacity as services. Its core business involves supplying Nvidia graphics processing units and AI cloud infrastructure, helping enterprises expand their artificial intelligence capabilities without building facilities themselves.
Riding the AI infrastructure wave
Nebius and its larger competitor CoreWeave have experienced surging demand throughout the year as insatiable appetite for AI capabilities has created capacity constraints even at the biggest cloud providers including Microsoft and Amazon. This dynamic has created opportunities for specialized infrastructure companies that can rapidly deploy computing resources.
The company reported revenue of $146.1 million in the third quarter ending in September, representing a 355 percent increase from the prior year period. This explosive growth trajectory positions Nebius among the fastest growing companies in the technology infrastructure sector.
Looking ahead, Nebius has set ambitious targets for continued expansion. The company aims to achieve $7 billion to $9 billion in annualized run rate revenue by the end of 2026, a dramatic increase from approximately $551 million at the end of September. Meeting these projections would require sustaining extraordinary growth rates over the next two years.
Heavy investment fuels expansion
The massive increase in capital spending reflects the company’s strategy of investing ahead of demand to secure critical resources. Competition for Nvidia has intensified as every major technology company races to expand AI capabilities. Beyond processors, Nebius must also secure suitable real estate and reliable power sources to operate data centers at scale.
These upfront investments explain the widening losses even as revenue soars. The business model requires enormous capital outlays before generating positive cash flow, a characteristic common among rapidly scaling infrastructure companies. Investors appear willing to accept near term losses in exchange for market position and future profit potential.
The Meta partnership validates Nebius’s approach and provides visibility into future revenue streams. Five year contracts offer stability that newer companies often lack, potentially making it easier to secure financing for continued expansion.
As artificial intelligence applications proliferate across industries, the underlying infrastructure required to support these systems becomes increasingly valuable. Nebius has positioned itself as a critical enabler of AI development, though the capital intensive nature of the business means profitability remains distant despite impressive revenue growth.