Nebius Sells Out Data Center Capacity, Reinforcing AI Demand Amid Persistent Risks

What happened

Nebius Group has sold all available data center capacity and presold new capacity, as reported in a recent article, highlighting strong demand for its AI infrastructure services. This development aligns with the DeepValue master report's mention of multi-billion dollar capacity agreements with Microsoft and Meta Platforms, which are key to the company's revenue scaling. The report notes that Nebius achieved rapid revenue growth in 2025 and positive adjusted EBITDA at the segment level since Q2 2025, supported by $4.8 billion in cash for expansion. However, the company continues to face significant challenges, including a high P/E ratio of over 100, net losses, elevated leverage, and reliance on timely GPU supply and data center execution. Thus, while the capacity sell-out underscores market interest, it does not eliminate the operational and financial risks outlined in the filings.

Implication

The sell-out of data center capacity confirms robust demand for Nebius's AI infrastructure, potentially accelerating near-term revenue and supporting long-term agreements with hyperscalers. However, the company's rich valuation and persistent net losses, coupled with negative interest coverage and high net debt to EBITDA, suggest limited margin of safety. Execution risks, such as GPU supply chain constraints and data center build-out delays, could hinder the monetization of presold capacity and contract ramps. Additionally, the promotional tone of the news article may overstate benefits, ignoring the detailed risks in SEC filings regarding supply dependencies and regulatory uncertainties. Therefore, investors should monitor hyperscaler milestone deliveries and cash burn closely before considering any upgrade from the current HOLD stance.

Thesis delta

The news reinforces the strong demand narrative for Nebius's AI infrastructure, aligning with the DeepValue report's emphasis on hyperscaler agreements and revenue scaling. However, it does not materially alter the core thesis, as valuation richness, profitability issues, and execution risks remain unaddressed, maintaining the HOLD recommendation.