Key Takeaways
- Citi analyst Tyler Radke elevated the Nebius (NBIS) price target to $287 from $169 while maintaining a Buy rating following first-quarter outperformance.
- Despite the bullish analyst note, NBIS shares declined 2.8% during premarket hours on Friday.
- The neocloud provider increased its contracted power capacity forecast by 1GW to exceed 4GW, supported by a new 1.2GW facility in Pennsylvania.
- Adjusted EBITDA margin in the AI division soared from 24% to 45% within one quarter.
- Radke emphasized that more than four customers are competing for each GPU becoming available, signaling intense market demand.
Shares of Nebius (NBIS) slipped 2.8% in premarket activity on Friday, contradicting the optimistic tone from Citi, which boosted its price target on the AI infrastructure provider to $287 from $169 after impressive first-quarter performance.
Tyler Radke, analyst at Citi, maintained his Buy recommendation on the shares. He characterized the quarterly performance as a “very clean top-and-bottom-line beat” compared to both his own projections and Wall Street consensus.
Radke identified three crucial takeaways from the earnings release. First, demand dynamics are intensifying, evidenced by rising GPU pricing and rapid capacity absorption across both legacy and current-generation hardware.
Company executives revealed that at least four customers are vying for each GPU as it comes online. This competitive intensity creates upward pricing momentum.
Second, Radke observed that Nebius deliberately kept its revenue and margin forecasts unchanged despite exceeding operational targets and expanding capacity. He interprets this conservative stance as positioning for positive guidance revisions in the coming quarters.
Third, he underscored the company’s financing structure. Approximately 90% of planned capital expenditures are already funded through existing cash reserves and contractual agreements, reducing liquidity concerns relative to industry peers.
Expanded Infrastructure Fuels Optimism
Nebius elevated its year-end 2026 contracted power capacity target from 3GW to more than 4GW. The upward revision stems from securing a new 1.2GW data center location in Pennsylvania.
The company’s active sales pipeline expanded by 3.5 times compared to the previous quarter. Its annualized revenue run rate hit $1.92 billion in the first quarter, tracking toward management’s $7 billion to $9 billion year-end objective.
The AI segment’s adjusted EBITDA margin jumped dramatically from 24% to 45% during the quarter. This margin expansion demonstrates significant operating leverage and robust pricing authority in its primary infrastructure operations.
Nebius holds a secured contract backlog nearing $50 billion. Major agreements include a $27 billion arrangement with Meta Platforms and a $17.4 billion commitment from Microsoft.
Strategic Partnerships Validate Infrastructure Strategy
NVIDIA committed a $2 billion strategic investment in Nebius, providing substantial industry credibility to the company’s infrastructure expansion plans.
The firm’s projected capital expenditure of $20 to $25 billion is underpinned by its substantial contract backlog, transforming what might appear as speculative investment into pre-committed infrastructure deployment.
Radke’s updated $287 price target captures this fundamental shift in risk profile. The jump from $169 to $287 represents one of the most substantial single-analyst target increases the stock has received.
Despite favorable analyst commentary, NBIS faces ongoing market skepticism. Short interest currently registers at 17.05%, indicating a meaningful segment of investors maintains bearish positioning.
Friday’s premarket weakness occurred even as the fundamental narrative — accelerating GPU demand, margin improvement, and capacity expansion — appeared to reinforce the bullish thesis articulated by Citi’s analysis.
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