AI demand, chip shortages and Tavily: four Nebius questions from investors and analysts

Nebius Group, a provider of cloud computing for AI by Yandex founder Arkady Volozh, reported a sharp increase in revenue and capital expenditures in the fourth quarter on February 12. After the publication of the statements, the company's management held a conference call to answer questions from analysts and investors. Oninvest selected some of them.

Why is Nebius confident that demand for AI will continue to justify the investment?

CEO Arkady Volozh: "We look at what is happening around us: how our daily habits are changing, what is happening in corporations, in our company, for example, how much programming is now done with AI? We see changes in all industries: in programming, in the movie industry, in research... Whatever you are doing now, you are doing it with artificial intelligence.

But these are just general considerations. Our confidence is based predominantly on what we see in our business. We see signals in all sectors. All the big customers are talking to us and to the whole market about expanding and leasing more capacity, more GPUs, because their AI business is growing. <...> From hyperscalers to AI startups, everywhere we see positive signals that we need to build more data centers for them, make more tools. If we could build faster than we are now, we would be doing it. We're building because it's all clearly growing."

Why did Nebius buy AI agent search engine Tavily? How does the company allocate capital when it comes to capacity investments or acquisitions?

Volozh: "We are building one of the largest platforms for AI developers to build their applications. We have two dimensions: scale and product functionality, between which we can allocate capital. We need to build scale, so we need to build all these data centers and buy all these hundreds of thousands of GPUs. And we need to build the product, and we build it organically, in-house. But we're never going to cover everything. So we go into acquisitions and spend some capital to improve our product, attract more talent, and ultimately scale faster. And Tavily is a perfect example of such an acquisition. Hopefully, it won't be the last."

Business Director Roman Chernin: "The Ma is so huge that we obviously won't be building everything on our own. We will focus on strategic opportunities and partnerships, finding companies and partners with a great product, expertise and similar capabilities to our DNA to create a platform that will be in demand by AI developers in the long term."

There is a shortage of memory for data centers in the news. How is Nebius dealing with this situation?

Andrey Korolenko, Director for Product and Infrastructure: "Building data centers is quite a complex task, and it is impossible to avoid all risks. But I think we manage this risk quite well. The main idea is that the fulfillment of our plan does not depend on one project. It's important to understand our distinction. We are a full-featured cloud service, which allows us the flexibility of not being dependent on any one site. We're just working to ensure that we have sufficient capacity. And we've already contracted most of the supplies to ensure capacity beyond 2026. Regarding the memory chip shortage. The first important point is our major deals with Microsoft and Meta. We were able to fully secure the necessary components last year for those contracts. And we did so in the second half of 2025 before the price increase. As for the rest, we are confident in our supply chain."

What helped Nebius beat its annualized revenue forecast (ARR) and how can you estimate demand in the first quarter?

Mark Boroditsky, Chief Revenue Officer: "The year-on-year revenue growth in the last quarter was driven by clear execution, pricing and capacity efficiency. We continue to make significant progress in attracting new customers and expanding relationships with existing customers. We are seeing very strong pricing across all GPU families and are operating at full capacity, selling out all available capacity.

Demand in the first quarter remains extremely strong and we are seeing the same trends that we saw in the second half of 2025 continue into this year. Three factors that give me tremendous confidence and enthusiasm for the start of 2026 are the continued growth in our order book, the positive trends in deal making and the progress we are making in our vertical strategy. Orders are expected to exceed $4 billion in the first Ma, and as we expand our available capacity and sales reach, we expect to continue to grow."

The company's fourth-quarter 2025 revenue grew 6.5 times year-over-year to $227.7 million, but the consensus forecast was even higher at $242.8 million. Annualized recurring revenue (ARR) at the end of last year was $1.25 billion, exceeding the company's forecast. At the same time, Nebius reported a sharp rise in capital expenditures due to purchases of artificial intelligence processors and investments in data centers. In the fourth quarter, they increased more than fivefold to about $2.1 billion. The quarterly net loss doubled to $249.6 million.

Nebius is one of the largest so-called neo-cloud providers that offer AI infrastructure to other technology companies. Nebius' clients include tech giants Microsoft and Meta, which have signed contracts worth $17 billion and $3 billion, respectively.

Nebius stock is up 200% at 2025, but it's now trading about 36% below its peak in October. Nearly 80% of analysts tracking the company advise buying its stock, according to MarketWatch data. The average target price suggests a 70% increase from current levels.

This article was AI-translated and verified by a human editor