Hey Traders,
Nebius (NBIS) blew past Wall Street’s revenue and profit targets this morning and still fell double digits before the bell.
If you’ve watched me on shows over the last two months, you know why.
I’ve said the AI buildout would hit physical and financial bottlenecks long before it ran out of demand, and this morning both of them showed up in one earnings report.
Look, the numbers came in huge. Revenue jumped 571 percent from a year ago to $980.8 million, against roughly $908 million expected. Adjusted EBITDA (a rough read on operating profit before interest, taxes and equipment wear) hit $465.8 million versus estimates near $353 million.
Nebius has signed more than $12 billion in new contracts since Q3 started, and it charged more than 20 percent more per GPU-hour on new deals than it did last quarter. The stock still handed back all of Wednesday’s 15 percent pop on CoreWeave’s (CRWV) numbers.
The selloff came from the guidance. Nebius pulled its 2026 revenue outlook down to the bottom of its $3.0 to $3.4 billion range because some of the capacity built for Microsoft (MSFT) slipped into the first half of 2027.
Microsoft didn’t walk away, and the contracts still stand. Nebius blamed power and permitting problems at a third-party partner’s sites, where temporary generators came offline before enough fuel cell capacity could replace them. The fix in New Jersey runs through Bloom Energy (BE) fuel cells, and that tells you where the value sits when the grid can’t keep up.
The financial side of the bottleneck showed up first. Lending markets froze up for certain companies in this space, and the cost of every borrowed dollar keeps climbing. Now the physical side has arrived: power, permits, construction, and generators nobody can swap out fast enough.
Both bottlenecks raise the same question: can anyone build fast enough to keep up with growth that curves straight up?
The prepayments show how hard demand still runs. Customer prepayments on Nebius’s Q3 deals covered more than 100 percent of the related capex (the money spent on data centers and chips), up from 50 to 60 percent in Q2. Customers handed over cash up front just to hold a spot in a line that already wraps around the block.
About $325 million of the quarter’s revenue came from a one-time source, tied to a setup where partners fund the capacity on Nebius’s platform. Most headlines skipped that. Strip it out and the beat looks a lot more ordinary.
Nebius also plans to spend more while booking less near-term revenue. It expects roughly $27 billion of capex this year, up from a $20 to $25 billion range, and $40 to $45 billion next year, where the Street expected closer to $29 billion. A company doing under $1 billion a quarter has a lot of execution to nail before that math works.
When the world can’t build fast enough, power shifts to whoever already owns compute. Companies with energized capacity (data centers already plugged in and running) and the balance sheet to keep building get to charge more, and those 20 percent-plus GPU price hikes show it in the numbers.
Companies still scrambling for megawatts watch every delay push revenue out while the capex bill keeps climbing. That tilts the field toward big cap over small cap.
So don’t read rising GPU rents as proof of endless demand. When data centers can’t go up fast enough, rents climb because compute stays scarce. That helps whoever owns live capacity and squeezes the builder waiting on a generator, along with the lender financing that stalled project.
A neocloud (a newer cloud company that rents out AI chips by the hour) like Nebius leans on partners for the scarce stuff, power and finished data center space, and pays a toll for it. This quarter it paid in delays too.
My trading stance: Nvidia (NVDA), Nebius and that whole corner of the market look too dangerous to trade right now. A stock that drops double digits on a beat turns every position into a coin flip with a bad payout. Until Nebius proves it can deliver what it’s already sold, I’ll watch from the sidelines.
Here for a good time… AND a long time,
