There are growth stocks. Then some stocks make you wonder if you’re reading the numbers correctly the first time. The latter is actually rare, and today we found that rare gem.
Nebius Group (NBIS) just reported 454% year-over-year revenue growth. Its AI Cloud segment alone grew 514% year over year. The stock jumped 34% after the Q2 earnings. Absolutely beautiful from every angle.
And then Bank of America analyst Tal Liani responded to the move by raising his price target to $310 from $280, maintaining his Buy rating, according to a note shared with me at TheStreet. Liani is a 4.7-star analyst ranked in the top 6% of all Wall Street analysts on TipRanks.
At the close of $259.20 on the earnings date, that target implies nearly 20% additional upside in a stock already up 201% year-to-date, according to Yahoo Finance.
CEO Arkady Volozh didn’t bury the lead in the shareholder letter.
We closed our largest AI Cloud deals on our strongest terms to date, at prices that represent a step-change in the economics of our business.
That phrase — step-change in economics — is the one I keep coming back to. Because when you dig into what Nebius actually reported, it’s not just growth.
It was honestly absolute cinema. Its growth, with improving unit economics, is faster than anyone expected.
Also Read: Nebius Group Latest News and Stories
Why Bank of America’s Liani sees more room to run in NBIS
Liani’s upgrade thesis rests on three pillars: Nebius’s AI-optimized cloud infrastructure, its global data center pipeline, and management’s execution on a unified platform.
That last point matters more than it sounds. Building GPU infrastructure at scale is one thing. And then building a full-stack platform that customers actually prefer over hyperscaler alternatives is another. The latter is considerably harder, and Nebius appears to be doing it.
The Q2 numbers support the confidence:
- Nebius AI Cloud revenue reached $575 million, accounting for 98% of total company revenue, with an annualized run rate of $3.0 billion, according to a Nebius Q2 earnings statement.
- Adjusted EBITDA margin on the AI Cloud business hit 50% in Q2, according to the shareholder letter.
For a company growing this fast, a 50% EBITDA margin is a clear signal that scale is working in its favor, not against it.
My review of the deal economics is where I find the most compelling detail. Core AI Cloud deals averaged more than $20 million in revenue per megawatt (MW), with short-term capacity pricing reaching $40-50 million per MW, according to the same shareholder letter.
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The payback period on Q2 deals dropped to one year and ten months, down from two to three years previously.
I crunched what that compression means. That Nebius is recovering its capital investment nearly twice as fast as it was just one quarter ago. That’s not incremental improvement. That’s a structural shift in the business model.
The backlog and deal momentum that change how you size this opportunity
Here is the number that stopped me when I first read the shareholder letter: Nebius has a backlog exceeding $40 billion. Full-year 2026 revenue guidance sits at $3 billion to $3.4 billion. That backlog represents more than ten years of revenue at the current run rate.
The Q2 commercial activity shows that the backlog is credible. The company signed four landmark deals for an average total contract value (TCV) of more than $1 billion each, according to the shareholder letter.
Related: Nebius stock quietly defies its own history after earnings
Customers included Reflection, Cohere, a U.S.-based AI neolab, and a large U.S. quantitative trading firm. TCV grew nearly 4x quarter-over-quarter, with TCV from new customers increasing more than 9x.
Roughly 70% of Q2 deals included customer prepayments, covering 50-60% of associated capital expenditure. In 2026, Nebius expects more than $9 billion in customer prepayments.
That’s an asset-light financing structure hiding inside a capital-intensive business. In fact, it’s one of the reasons the company ended Q2 with $8 billion in cash and $2.3 billion in positive operating cash flow despite spending $5.66 billion in capital expenditure during the quarter alone.
Why I think the valuation concern is real, but not yet decisive
Let me offer my honest take here, because the bull case is compelling enough that the risks deserve equal airtime.
Nebius trades at a premium that requires continued execution at a pace few companies sustain. The competition is serious. CoreWeave (CRWV), Microsoft (MSFT), and Amazon (AMZN) are all competing for the same large-scale AI compute contracts.
Related: Nebius CEO doubles down on capex spending
Hyperscalers have balance sheets that dwarf anything Nebius can deploy. And capital expenditure of $20-$25 billion planned for full-year 2026 means the cash burn is enormous, even with prepayments partially offsetting it.
Management also made a strategically interesting comment: they could pre-sell all of their 2027 capacity today but are intentionally keeping some uncommitted to capture higher yields from shorter-duration, premium demand, according to the shareholder letter.
That’s a confident posture. Perhaps too confident if AI compute demand softens faster than expected.
NBIS shares are up 201.06% year-to-date and 256.79% over the past year, according to Yahoo Finance. The S&P 500 returned 13.97% and 20.65% over those same periods.
$310 target implies the market hasn’t fully caught up to the economics Nebius is now reporting. Given a 50% EBITDA margin, a $40 billion backlog, and deal payback periods compressing toward two years, that argument is hard to dismiss outright. But at 201% year-to-date, the margin for error has also narrowed considerably.
Related: Morgan Stanley resets Nebius stock price forecast