Computing power is gold! A single contract breaks through $1 billion, and the AI newcomer Nebius (NBIS.US) sees its cloud business revenue soar by 500%, skyrocketing in pre-market trading.

Nebius (NBIS.US) experienced a staggering 514% year-on-year surge in cloud business sales in the second quarter, driven by strong demand for artificial intelligence computing power. The financial report indicated that revenue from its AI cloud business, which constitutes the vast majority of its operations, reached $575 million for the quarter. Total revenue for the quarter exceeded $582 million, representing a 454% year-on-year increase, surpassing analysts' expectations of $557 million; the loss per share was $0.68, exceeding the expected loss of $0.18. In pre-market trading on Wednesday, the company's stock price rose by about 16%. The company also reaffirmed its full-year 2026 outlook and stated that demand for AI computing power continues to accelerate, helping it secure larger, more profitable customer contracts. In its first-quarter earnings report released in May, Nebius reiterated its full-year 2026 expectations, predicting annual revenue of $7 billion to $9 billion, with group revenue of $3 billion to $3.4 billion and an adjusted EBITDA profit margin of about 40%. The market generally anticipates revenue of $3.38 billion. CEO Arkadiy Vorozhko stated, Everything we set out to do this quarter, we achieved, and added, In most cases, we did more. The statement noted that the value of contracts won this quarter quadrupled compared to the previous quarter, including four agreements with an average value exceeding $1 billion each. The company indicated that pricing was enhanced this quarter due to demand for next-generation AI chips and higher rates for older generations of GPUs. Approximately 70% of the contracts signed during this period included customer prepayments, covering 50% to 60% of related capital expenditures. Nebius reported finalizing four milestone AI cloud deals this quarter, with an average total contract value exceeding $1 billion, nearly quadrupling the total contract value compared to the previous quarter. Vorozhko noted that the new pricing initiatives launched at the beginning of the third quarter, such as initial auctions and short-term computing transactions, show promising prospects. He added that the company has identified pricing opportunities in the $40 million to $50 million range per megawatt and signed its first contract of this kind this week. Competitor CoreWeave Inc. forecasted on Tuesday that its third-quarter sales would exceed expectations, fueled by ongoing AI spending. Shortened Capital Expenditure Payback Cycle Nebius is one of several so-called new cloud companies renting out computing power in data centers, responding to the tremendous global demand for infrastructure capable of handling AI workloads. The company was spun off from Russian internet giant Yandex in 2024 and has established collaborations with large data center operators such as NVIDIA Corporation, Microsoft Corporation, and Meta Platforms Inc. Building infrastructure for AI workloads is an expensive business. Nebius stated in its announcement that it secured $775 million in financing in July, using assets that included GPUs as collateral. In the second quarter, the company spent approximately $57 billion on purchasing chips, equipment, and expanding data centers. Vorozhko mentioned that, overall, the expected payback period for capital expenditures and related operational costs from transactions in the second quarter is 1 year and 10 months, down from the previously expected payback period of 2 to 3 years. Nebius noted that the company will continue to increase capital expenditures this year and plans to adopt diversified financing channels.