Nebius shares fall 9% as company announces capital spending plan of up to $45 billion
Key Facts
Nebius Group shares fell 9% in the November 13 session as concerns mounted over financing the expansion of AI infrastructure, according to Reuters. The decline came as the company announced plans for capital spending of $40 billion to $45 billion in 2027. Nebius said prepayments and asset financing tied to existing contracts with investment-grade customers alone would cover 75%–85% of that spending. The company is also relying on its balance sheet in its plan, according to its shareholder letter, making the stated percentage the result of more than one funding source. The drop refocused the market on the amount of money required to keep pace with demand for cloud computing dedicated to AI.
Third-quarter results showed rapid revenue growth, with revenue reaching $980.8 million, up 571% from $146.1 million in the same period of 2025. During the same period, the loss from continuing operations narrowed to $37.5 million, compared with a loss of $119.6 million a year earlier. On an adjusted, non-GAAP basis, the company posted net income of $90.9 million, after an adjusted loss of $100.4 million in the third quarter of 2025. The comparison shows the difference between continuing accounting losses from operations and a shift to income on an adjusted basis. Purchases of property, equipment and intangible assets also rose to $7,300.4 million, from $955.5 million a year earlier, reflecting the scale of investment in expansion.
Nebius raised its estimate for 2026 capital expenditures to about $27 billion, from its previous range of $20 billion to $25 billion. In its shareholder letter, the company said some of this year's revenue had shifted to early 2027, and it now expects 2026 revenue to come in at the low end of its previous range of $3.0 billion to $3.4 billion. The company linked the deferral to the timing of new capacity coming online, while saying reliance on third parties had caused delays at some sites, including New Jersey. Chief Executive Arkady Volozh said the company prefers to build its own sites because that gives it greater control over execution and better economics. This puts infrastructure delivery at the heart of the company's ability to turn customer commitments into revenue on its targeted timetable.
The company said prepayments on deals signed in the third quarter covered more than 100% of the capital expenditures associated with them, up from 50%–60% in the second quarter. It also said customers had committed to more than $12 billion in contract value since the start of the third quarter. Cash and cash equivalents stood at $7.4 billion at the end of the quarter, while the company listed prepayments, asset-backed financing, debt or equity among its available financing options. These elements provide context for the plan to cover most of the announced 2027 spending, with some of it remaining outside the share the company said would be covered by existing contracts, prepayments and asset financing. The combination of contractual commitments, cash and financing options reflects the resources the company is putting behind its expansion program.
In premarket trading on November 12, the stock fell to $120.48 from Wednesday's close of $154.69, a decline of 22.12%, according to an Investing.com report citing Reuters. That move came in the session before the 9% drop recorded on November 13, placing the latest decline in the context of sustained pressure on AI cloud computing stocks. Reuters linked the November 13 fall to renewed concerns about AI financing after Nvidia's Jensen Huang's exit, as Thursday's losses extended. The company said in its letter that revenue from some delayed projects would shift to early 2027, while plans to add new capacity continue. Nebius expects to bring more than 1 gigawatt of new capacity online each year.
Nebius gave an initial 2027 revenue forecast of $12 billion to $13 billion and said it aims to reach pretax breakeven in the fourth quarter of that year. The company kept its 2026 adjusted EBITDA margin forecast at about 40%, while expecting annual recurring revenue to exceed $7 billion in February 2027. These targets put revenue growth and operational expansion at the forefront of next year's plans, alongside the announced capital spending program. Execution will depend on bringing new capacity online on schedule and on the financing the company expects to raise through prepayments, asset financing and its balance sheet. The company said it expects to bring more than 1 gigawatt of new capacity online annually.