Nebius Operating Margin Turns Positive In FY27: Analyst

On Monday, Nebius Group (NASDAQ:NBIS) closed its offering of convertible senior notes. The company has earlier estimated net proceeds of about $3.96 billion after discounts, commissions, and offering expenses. Management plans to use the proceeds to fund data center construction and build-outs, invest in its full-stack AI cloud, expand its data center footprint, and procure key components, including GPUs, alongside general corporate purposes. On Tuesday, Bank of America Securities analyst Tal Liani initiated coverage on the stock at a Buy rating and a price forecast of $150. The analyst forecasts revenue growth of 501% in 2026, 199% in 2027, and 64% in 2028, with operating margins turning positive by FY27. AI Infrastructure: A Rapidly Growing Market The analyst notes that the AI Infrastructure-as-a-Service (IaaS) market is on a steep upward trajectory, projected to reach $419 billion by 2028. Nebius operates at the heart of this growth, providing a platform that enables companies to train and run AI models efficiently without investing in their own costly infrastructure, adds the analyst. The analyst says that the company has a customer base that includes tech giants like Microsoft and Meta, and its unique value proposition lies in its ability to offer scalable, GPU-dense distributed workloads. Competitive Landscape and Financial Differentiators Nebius stands out due to its differentiated architecture, which allows the interconnection of GPUs across multiple locations, functioning as a unified system, adds the analyst. Liani writes that this capability not only enhances computing efficiency but also scales AI workloads as needed. Liani says that in the competitive AI compute market, Nebius leverages its advanced virtualization layer and full-stack AI cloud offerings to differentiate from both traditional hyperscalers like Microsoft and Oracle, and emerging Neoclouds. I The company’s ability to stitch together global GPU resources into a single programmable fabric provides Nebius with a unique competitive edge, adds the analyst. Strategic Expansion and Execution The analyst notes that the firm plans to quadruple its capacity by 2026, leveraging pre-energized sites to expedite the deployment process. This strategy not only mitigates traditional infrastructure bottlenecks but also aligns with the company’s aggressive growth plans. NBIS Price Action: Nebius Group shares were up 0.82% at $115.08 at the time of publication on Tuesday, according to Benzinga Pro data. Photo via Shutterstock