TLDR
- Citi raised its price target on Nebius (NBIS) to $287 from $169, keeping a Buy rating after Q1 results beat estimates.
- NBIS fell 2.8% in premarket trading on Friday despite the positive analyst note.
- Nebius raised its contracted power capacity target by 1GW to over 4GW, adding a new 1.2GW Pennsylvania site.
- The company’s AI segment adjusted EBITDA margin jumped from 24% to 45% in a single quarter.
- Citi analyst Tyler Radke flagged four-plus customers competing for every GPU brought online as a key demand signal.
Nebius (NBIS) dropped 2.8% in premarket trading on Friday, even as Citi raised its price target on the neocloud company to $287 from $169 following a strong first-quarter earnings report.
Citi analyst Tyler Radke kept his Buy rating on the stock. He described the quarter as a “very clean top-and-bottom-line beat” relative to both Citi and consensus estimates.
Radke pointed to three key signals from the results. First, demand is strengthening, with GPU pricing rising and capacity selling out across both new and older-generation chips.
Management noted that four or more customers are competing for every GPU brought online. That kind of demand pressure is a direct pricing tailwind.
Second, Radke flagged that Nebius chose to hold its revenue and margin guidance steady despite the operational beat and the capacity increase. He views that as deliberate conservatism that sets up favorable revisions heading into Q2 through Q4.
Third, he highlighted the financing model. Around 90% of capital expenditure is already secured through cash and contractual commitments, which he said makes Nebius less demanding on liquidity than peers.
Capacity Expansion Drives Confidence
The company raised its contracted power capacity goal for year-end 2026 from 3GW to over 4GW. That increase was driven by a new 1.2GW site in Pennsylvania.
Its sales pipeline grew 3.5 times quarter-over-quarter. Annualized run-rate revenue reached $1.92 billion in Q1, putting it on a path toward management’s $7 billion to $9 billion year-end target.
The AI segment’s adjusted EBITDA margin surged from 24% to 45% in the quarter. That expansion points to strong operating leverage and pricing power in its core infrastructure business.
Nebius has a secured backlog approaching $50 billion. That includes a $27 billion contract with Meta Platforms and a $17.4 billion deal with Microsoft.
From Speculative Build to Pre-Sold Infrastructure
NVIDIA has made a $2 billion strategic investment in Nebius, adding a layer of industry validation to the company’s infrastructure buildout.
The company’s capital expenditure plan of $20 to $25 billion is backed by that secured backlog, shifting the risk profile away from speculative spending.
Radke’s revised price target of $287 reflects that shift. The move from $169 to $287 is one of the larger single-note price target increases for the stock.
Despite the positive analyst coverage, NBIS remains under some pressure. Short interest stands at 17.05%, suggesting a portion of the market is still skeptical.
The stock’s premarket decline on Friday came even as the broader setup — rising GPU demand, margin expansion, and capacity additions — appeared to strengthen the bull case laid out by Citi.
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