Nebius' Contracted Power Surge Raises Capex Bar; Execution Still Key

What happened

Nebius' contracted power guidance has surged to 5GW, as reported by The Motley Fool, indicating continued strong demand for AI infrastructure. Achieving that target will require significant additional capital expenditures, but the company expects increasing revenue from its long-term deals with hyperscalers like Microsoft and Meta to reduce reliance on debt issuance. The latest deep-value master report acknowledges that Nebius has secured over 2GW of contracted power and large customer commitments, but notes that the stock at $271.62 already prices in successful conversion of contracted power to connected power to billable revenue. Key operational milestones, including reaching 800MW-1GW of connected power by year-end 2026 and avoiding ATM dilution before Meta deployments in early 2027, remain unproven. Therefore, while the news reinforces demand strength, the investment thesis of waiting for a better entry point remains unchanged, with attractive entry at $220 and trim above $310.

Implication

The surge in contracted power guidance underscores the scale of Nebius' opportunity, but also raises the capex bar. Investors should monitor connected power milestones and financing disclosures closely. If the company achieves its targets without equity dilution, the bull case of $330 becomes more likely; however, failure to do so could push the stock toward the bear case of $205. Given the current valuation of over 135x EV/EBITDA, risk-reward is unattractive for new buyers at $271.62. Existing holders should consider trimming above $310 and only add on significant pullbacks or after concrete evidence of on-schedule delivery.

Thesis delta

The thesis delta is minimal: the news confirms robust demand but does not address execution risk. The report's WAIT rating and valuation concerns persist because the market is already pricing in successful conversion of contracted power to revenue. The edge remains in waiting for confirmation of connected power targets and financing discipline before increasing exposure.