Bank of America analyst Tal Liani raised his price target on Nebius Group (NASDAQ: NBIS) to $310 from $280, while maintaining his Buy rating following a blockbuster quarterly earnings report.
Nebius reported 454% year-over-year revenue growth for Q2 2026, with its AI Cloud segment surging an even more dramatic 514% over the same period.
The stock jumped 34% following the earnings release, extending what has already been a remarkable 210% year-to-date rally driven by accelerating demand for AI compute infrastructure.
Revenue came in at $582.3 million for the quarter, topping Wall Street’s consensus estimate of $569.9 million compiled by analysts polled by FactSet.
Adjusted EBITDA reached $236.2 million, well above the $168.8 million analysts had expected, with Nebius posting an EBITDA margin of 40.5% against the Street’s estimate of just 27.8%.
Liani attributed the strong beat to increased capacity deployment and a growing mix of higher-margin revenue sources, calling out both execution and pricing power as key drivers.
The analyst noted that Nebius maintained its connected power target of 800 MW to 1 GW by the end of 2026, directly addressing investor concerns about the company’s ability to bring capacity online at its Vineland facility.
Liani highlighted a notable shift in contract structure, explaining that core one-to-three-year contracts generate $20 to $25 million per megawatt, while shorter three-to-six-month contracts for customers with immediate compute needs command $40 to $50 million per megawatt.
That shift toward shorter-term commitments has materially improved unit economics, with Nebius now estimating a payback period of one year and ten months on Q2 2026 deals, down sharply from a historical range of 2.5 to 3 years.
One of the most striking figures from Nebius’s shareholder letter is a backlog exceeding $40 billion, against full-year 2026 revenue guidance of $3 billion to $3.4 billion, representing more than ten years of revenue at the current run rate.
The company signed four landmark deals during Q2, each with an average total contract value of more than $1 billion, with customers including Reflection, Cohere, a U.S.-based AI neolab, and a large U.S. quantitative trading firm.
Competition for large-scale AI compute contracts remains intense, with CoreWeave (CRWV), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN) all pursuing the same enterprise customers.
Nebius plans capital expenditure of $20 to $25 billion for the full year 2026, representing an enormous cash burn even as prepayments from customers partially offset those costs.
Of the 19 analysts currently covering Nebius, 13 carry a Buy or Strong Buy rating on the stock, according to LSEG data, reflecting broad institutional confidence in the company’s growth trajectory.
Notably, Michael Burry has moved in the opposite direction, adding to bearish bets against Nebius even as the broader analyst community remains constructive on the stock.
