Nebius Group gave Wall Street the type of quarter that keeps the artificial intelligence infrastructure trade alive, even as investors become more selective about which companies can actually turn AI demand into revenue.
The Amsterdam-based AI cloud company reported first-quarter revenue of $399 million, up 684% from $50.9 million in the same period last year. Adjusted EBITDA reached $129.5 million, compared with an adjusted EBITDA loss of $53.7 million a year earlier, according to Nebius’ first-quarter results.
The growth was driven by the company’s core Nebius AI cloud business, stated in the 2026 Q1 letter to shareholders, which generated $389.7 million in revenue during the quarter, up 841% from the year-ago period. That business accounted for about 98% of total group revenue, while annualized run-rate revenue reached $1.92 billion at the end of March, up 674% year over year and 54% from the end of December.
Morgan Stanley lifts its target after earnings
In the Morgan Stanley note given to TheStreet, analysts raised their Nebius price target to $144 from $126, while keeping an Equal-weight rating on the stock. The move reflected stronger execution, better pricing, faster capacity progress, and demand that continues to run ahead of available supply.
The updated target still tells a more cautious story than the headline increase suggests. Morgan Stanley’s note listed Nebius shares at $207.27 at the close on May 13, meaning the firm’s revised target remained well below the stock’s recent price even after the increase.
Morgan Stanley said Nebius’ Q1 revenue, ARR, and adjusted EBITDA all came in above consensus. The firm also noted that management reiterated its 2026 targets for $3.0 billion to $3.4 billion in revenue, $7 billion to $9 billion in ARR, and an adjusted EBITDA margin of about 40%.
Power becomes the center of the Nebius story
The biggest shift in the Nebius story is no longer just how much AI demand exists. It is how quickly the company can bring enough power, GPUs, and data center capacity online to serve that demand.
Nebius said contracted capacity already exceeds 3.5 gigawatts, above its prior year-end goal of 3 GW. The company also raised its contracted power guidance to more than 4 GW by the end of the year, with owned capacity representing more than 75% of the total.
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The company also announced a new Pennsylvania site with up to 1.2 GW of power. That project is expected to be delivered in phases beginning in 2027, adding to Nebius’ growing U.S. footprint alongside its 1.2 GW AI factory in Independence, Missouri.
Nebius continues to expect 800 MW to 1 GW of connected power by year-end. The company said it is progressing across both new and existing co-location sites and expects a significant capacity increase in the third quarter.
Morgan Stanley sees a wide range of outcomes
Morgan Stanley’s risk-reward framework highlights how wide the range of outcomes has become for Nebius stock. The firm’s bull case is $400, based on Nebius bringing more than 5 GW of power online by 2030, selling to a broader customer base, and benefiting from higher margins tied to lower total cost of ownership and better software monetization.
The firm’s bear case is $70, based on a scenario where AI demand and supply normalize, competition from hyperscalers intensifies, and data center delivery proves harder than expected. That spread helps explain why Morgan Stanley raised its target while staying on the sidelines after the stock’s sharp move.
Morgan Stanley also pointed to the company’s capital needs. The bank said Nebius raised its 2026 capex guidance to $20 billion to $25 billion from $16 billion to $20 billion, largely due to capacity expectations for 2027 rather than higher component costs.
Nebius ended the quarter with more than $9 billion of cash, supported by $6.3 billion raised in Q1, including a $2 billion NVIDIA equity investment and $4.3 billion from convertible securities. The company said it also generated $2.3 billion of operating cash inflows in the quarter.
Nebius’ stock has already priced in a lot
Nebius is moving quickly, and the company’s latest results give investors plenty to like. Revenue is accelerating, AI cloud demand remains strong, pricing is favorable, and the company is locking up power at a pace that supports a much larger business over the next several years.
Morgan Stanley’s update, however, shows how hard it can be for a fast-growing AI infrastructure company to keep up with a stock that has already raced ahead. The firm sees a bigger opportunity for Nebius after the quarter, but its revised target still sits far below the share price listed in the note.
Related: Bank of America revamps Nebius stock price target ahead of earnings
