Surging Demand for Computing Power: Nebius Q2 Revenue Soars 454% Year-on-Year, AI Cloud Sales Skyrocket 514% | Earnings Report Insights

AI cloud computing infrastructure company Nebius delivered a strong Q2 report card: revenue grew 454% year-on-year to $582.3 million, exceeding market expectations, with its share price surging over 23% intraday. This further reinforces the signal of sustained strong demand for AI computing infrastructure, following CoreWeave’s upward revision of its full-year guidance the previous day.

AI cloud business sales skyrocketed 514% year-on-year to $575 million, accounting for about 98% of the company's total revenue this quarter and becoming the core growth driver. Looking ahead, Nebius reaffirmed its 2026 revenue guidance, expecting full-year revenue of $3–3.4 billion, and maintained its annualized operating income target of $7–9 billion.

Nebius CEO Arkady Volozh stated that the company is transforming robust demand into “contract-backed and profitable growth”, adding that all targets set for the quarter were achieved, in most cases exceeding expectations.

Mega-contracts emerge, strengthened pricing power for compute

Nebius made breakthroughs on the contract side this quarter. The company signed four major AI cloud contracts with customers including Reflection, Cohere, a US-based Neolab, and an American quantitative trading firm, with each contract averaging over $1 billion. The total value of these four contracts nearly quadrupled from the previous quarter, and the value of new customer contracts grew over ninefold year-on-year.

Compute pricing is also strengthening. Volozh revealed that the settlement price from the company’s first capacity auction was 15% higher than the previous record high for Blackwell GPUs; Chief Revenue Officer Marc Boroditsky noted that this price was 20% higher than Nebius' internal Blackwell pipeline pricing.

Currently, the annual MW value of Nebius’ long-term contracts is around $20–25 million per MW, whereas short-term contract prices, typically for terms not exceeding six months, have risen to $40–50 million per MW, with some deals priced even higher.

Volozh stated that, based on current contract terms, the company could completely sell out the planned capacity through 2027, but management chooses to reserve some supply to realize higher actual value from short-term contracts.

Profitability surges, capex expands in tandem

Profitability has shown a significant improvement. Nebius’ adjusted EBITDA for the quarter reached $236.2 million, compared to a $21 million loss in the same period last year; adjusted EBITDA margin rose from 32% in Q1 to 41%. Specifically, adjusted EBITDA for the AI cloud business was $286 million with a margin of 50%.

CFO Dado Alonso noted that the group’s overall margin is lower than that of the AI cloud segment mainly because the company continues to invest in early-stage businesses such as the autonomous driving platform Avride and the edtech platform TripleTen.

At the same time, capital expenditure has rapidly increased. This quarter’s capex was about $5.7 billion, higher than analysts’ expectation of $4.7 billion, mainly used for GPU procurement and data center expansion. As of the end of June, the company’s cash and cash equivalents stood at $8.042 billion, with operating cash flow for the quarter at $2.246 billion—a significant reversal from the net outflow of $167.8 million in the same period last year.

Year-end contracted capacity target raised to 5 GW

Strong demand has also prompted Nebius to further accelerate infrastructure expansion. The company raised its contracted power capacity target for the end of 2026 from over 4 GW to 5 GW, with plans to add more than 1 GW of capacity annually from 2027 onwards.

The company expects the majority of contracted capacity to come online in the next two to three and a half years. However, Nebius also emphasized that there is a time lag from contracted capacity to actual revenue, as data center commissioning, network deployment, and customer onboarding each require time.

To support large-scale construction, the company is raising funds through upfront customer payments, debt financing, and co-development arrangements. Nebius expects to secure over $9 billion in customer prepayments for the full year 2026, with total cumulative customer commitments now exceeding $40 billion.

In July, the company completed a $775 million asset-backed debt financing at SOFR plus 250 basis points, secured by deployed GPU infrastructure and an investment-grade customer contract.

In addition, the company is advancing an “asset-light” partnership model, in which partners fund and operate data centers while Nebius provides the full-stack platform and customer resources. Volozh stated that the company has received dozens of partnership intents and expects this model to contribute additional capacity as early as 2027.

Rising competition, compute supply-demand remains key support

With new players like xAI entering the AI cloud space, Nebius’ management remains optimistic about the demand outlook. Volozh emphasized that current AI compute demand still far exceeds supply, and the company is confident it can absorb all planned capacity through 2027 at current prices and contract terms.

According to Reuters, citing Emarketer analyst Jacob Bourne, although market competition is heating up and demand for AI cloud capacity continues to grow, a more crucial question is whether this demand can extend beyond the AI sector and foster a more diverse and sustainable customer base.

Nebius was spun out of Russian internet giant Yandex in 2024, and has since established partnerships with technology giants such as Nvidia, Microsoft, and Meta.

Looking to 2026, the company expects full-year capital expenditure to reach $20–25 billion, with an adjusted EBITDA margin of about 40%, and plans to announce formal 2027 guidance later this year.