Nebius Is Worth 55 Times Its Revenue. What Does That Price Assume?

Nebius Group (NASDAQ: NBIS) carries a market capitalization of about $48.6 billion. Over the past 12 months, the company collected $877.9 million in revenue.

Divide one by the other and the stock trades at roughly 55 times sales -- the sort of multiple usually attached to a software business. Nebius buys graphics processors by the billion and signs power contracts by the gigawatt.

But the trailing figure in that fraction is doing something odd. In the first quarter, group revenue rose 684% year over year to $399 million. Revenue at the Nebius artificial intelligence (AI) cloud business alone rose 841% year over year to $390 million, up 82% from the previous quarter.

In other words, the past 12 months include periods when this company was a small fraction of its current size. The denominator describes a business that no longer exists. So what is the price actually assuming?

Image source: Getty Images.

A trailing figure the company has already outgrown

The measure Nebius points investors toward is annualized run rate, which it calculates by taking the last month of a quarter's AI cloud revenue and multiplying by 12. That figure reached $1.9 billion at the end of March. It was $1.25 billion at the end of December, and it is up 674% year over year.

Management guides for group revenue of $3 billion to $3.4 billion this year and a run rate of $7 billion to $9 billion exiting the year. It also expects a group adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin of about 40%.

That last figure is not much of a stretch from where the business already sits. After all, the AI cloud business ran at a 45% adjusted EBITDA margin in the first quarter, though the group came in at 32%, dragged by two much smaller units.

Now measure the market capitalization against those numbers instead of the trailing ones. About $48.6 billion against $3.2 billion of 2026 revenue at the midpoint is roughly 15 times this year's sales. Against $8 billion of exit run rate, it is about six times.

Six times a run rate is a price investors can argue about. It isn't a number that requires believing the company can do something it has never done.

That is what the 55 is really assuming: that the guidance lands more or less as given.

The cost of getting there

Getting there is the expensive part, and it is where I'd slow down.

Nebius has contracted more than 3.5 gigawatts of power and raised its year-end target to more than 4 gigawatts. However, contracted power isn't power that earns revenue. Management expects 800 megawatts to 1 gigawatt of connected power by the end of this year.

So roughly a quarter of what has been contracted may be running by December. The rest arrives in 2027 and beyond.

Building it out costs $20 billion to $25 billion in capital expenditures this year alone. Nebius spent about $2.5 billion in the first quarter and ended March with $9.3 billion in cash, after securing $6.3 billion during the quarter through convertible notes and an equity investment from Nvidia.

The gap between the cash on hand and the spending plan gets closed by upfront customer payments and more debt and equity. In July, Nebius raised $775 million in its first senior secured debt facility, backed by deployed chips and contracted cash flows. Of course, the reason lenders keep showing up is the contracted revenue behind it, including a second agreement with Meta Platforms worth up to $27 billion.

Depreciation is the piece adjusted EBITDA leaves out, and for a business like this it isn't a footnote -- it is the cost of the product.

If the full $25 billion went to equipment depreciated over five years, the annual charge would approach $5 billion once everything is in service. That is more than the roughly $3.2 billion of annualized adjusted EBITDA implied by $8 billion of run rate at a 40% margin.

So the price assumes the $7 billion to $9 billion run rate arrives. Then it assumes another leg of growth on top of that, large enough to carry the depreciation on everything now under construction.

The first part looks achievable to me. The second depends on contracts beyond those already signed, and it is being funded with a mix of customer payments, debt, and equity.

Nebius reports second-quarter results before the market opens on Wednesday, Aug. 12. The two figures I'd read first are the run rate and the capital spending. If the run rate is tracking toward the guided range while spending stays inside the $25 billion ceiling, the case arguably holds together.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.