In this want I want to calculate $NEBIUS(NBIS)$ price at which the stock could be trading in 2030.
After this quarter, I realised that I need to update my assumptions as the company gave more details about pricing and its new asset-light AI segments.
I am not gonna make you wait too long:
I see 530-690% upside to Nebius stock by 2030!
This is who I get there:
First, Nebius' 2026 contracted power target is 5GW, which means that Nebius expects to have agreements with utilities to supply them with 5GW of electricity on 31 December 2026.
Yet, to bring all this capacity online as active IT power, Nebius will need years, as they have to construct the building and install all the electrical, GPUs, cooling, networking, and other equipment.
Thus, I am modelling 4.2GW of active IT power in 2030, a 400MW increase from the previous model
What I am also adding is an additional 1.5GW of capacity from its new asset-light model.
Next, I am modelling that 65% of that capacity will go towards bare metal contracts, largely with Hyperscalers and major start-ups, and 35% as AI cloud to others.
The demand that Hyperscalers have for bare metal compute is absolutely insane. I believe Nebius will not miss out on the opportunity to serve them.
This is a slight increase from the 68/32 split in my prior valuation model. Recent acquisitions clearly indicated that Nebius is very focused on its Cloud offering, so I increased its share slightly.
This model is also a bit simplified, as I am kind of blending owned and colocation sites together, some of the depreciation expense will probably shift to opex in reality. However, with the recent reveal that 75% of the capacity is to be owned, that has a small impact.
For bare metal, I am modeling $9M revenue per MW, whilst for AI cloud, I model .
However, in the asset-light segment, I am modeling $7M in revenue per MW. This is net of payments to the infrastructure partner. I am assuming that in this model Nebius earns
$16-20M
per MW gross, but then pays about $9-13 per MW to the partner.
You are probably thinking, why would Nebius then sell their capacity to Microsoft and Meta for $9 if they have so much demand that they need this asset-light model in the first place? Well, this is necessary because Meta and Microsoft pay large pre-payments, and lenders are willing to lend against customer contracts with them. These contracts are needed to fund the data center buildout. In the future, Nebius would ideally move to a 100% AI cloud business and not serve the Hyperscalers anymore.
Some are probably saying that the 65% bare metal estimate is too high, and could very well be the case, but I will use it for now.
This would give us bare metal revenues of $24.6B, AI cloud of $29.4B, and asset light of .
Bare metal segment EBITDA of 70%, AI cloud segment EBITDA of 85%.
Furthermore, I am modeling that the asset-light segment will also have EBITDA of 85%.
At $42M per MW, it would cost Nebius $176.4B to bring 4.2GW of capacity online!
While this is an incredibly large amount, I estimate Nebius raising this funding in the following ways:
$60B in GPU financing, about 34% of the total amount.
$7.1B in vendor financing, 4% of total
$19.4B in conventional debt, 11% of total.
$31.8B by selling equity.
$37B in pre-payments from customers.
$21.2B from internal project cash flow.
So, I model $86.5B of the $176.4B funding coming from debt at 7% average interest rate!
Banks are open to lending even 90% of the GPU value, so $60B sounds completely doable. Also, as I mentioned in the cash section, Nebius just reported $6B in cash from deferred revenues, and said that they plan to fund the $25B capex for 2026 largely internally.
It is clear that the company is well capitalized, and they have plenty of venues to raise funding from.
Next, to calculate the depreciation, I create a detailed depreciation table.
From total capex, I am modeling 60% going towards GPUs, 19% other equipment, 18% building, and 3% land.
GPUs depreciate in 5.5 years, other equipment in 7, building in 25, and land never.
The result is 2030 depreciation of $17B, and net PPE of .
In terms of operating expenses, I model Nebius needing about 13% of revenues to cover R&D and other opex.
We get 2030 revenues of $64.5B, and group EBITDA of .
A 66% EBITDA margin might seem high, but we need to remember that for a high-capex data center business such as Nebius, depreciation is the biggest expense.
After taking into account $17B in depreciation and $6.05B in interest, we get to earnings before taxes of .
Tax of 20%.
The result is net income of $15.8B, a margin of 24%.
Next, I model dilution of 45% over the next 4.5 years, with the total number of shares outstanding reaching 394.2M.
An exit multiple of 40, and we get a $1600 stock, an upside of 532% from today’s price of $253.
Discounting back 5 years with a 18% discount rate, we get an estimated fair value per share of $699, implying that Nebius share price of $253 could be trading for a 64% discount to its fair value per share.
However, the market would very likely assign a higher multiple to an AI stock such as this if the company delivers the modelled results.
A P/E of 50-60 results in an upside of 690-848%!
I realize that these are very aggressive assumptions, so let’s look at what could go wrong.
1. Demand is not as high as Nebius, McKinsey, Brookfield, and all other experts think. If AI compute supply is higher than the demand, prices could plummet.
2. Competition increases, driving down prices and lowering ARR.
3. There is a lot of debate regarding the 4-6 year depreciation schedule, with many arguing that chip useful lives are much lower. In such a scenario, the deprecation cost of 5 years I modeled could be much higher.
4. Some analysts have voiced concerns regarding the electricity prices. We are entering a stage of AI development where energy access is a key bottleneck, and AI demand might lead to significantly higher prices, possibly leading to lower segment EBITDA margins.
5. Growth could stall if Nebius can’t raise the capital required. Currently, that seems unlikely, but things could change quickly.
6. Geopolitical and trade issues could cause disruptions in the semiconductor supply chain, delaying crucial chip deliveries. If Asian countries that manufacture the data center equipment suffer an energy crisis because of the Iran war, they might be forced to increase prices.
7. OpenAI is the driving force behind the AI revolution. It is very likely that Nebius’ New Jersey capacity sold to Microsoft will go to OpenAI. Recently, they have been signing deals left and right with Nvidia, Oracle, AMD, Broadcom, Corewave, and many more, totaling over . Some have raised concerns of a bubble forming, if they are right, the bursting of this bubble could prove to be catastrophic to Nebius.
However, despite these risks, the revolutionary potential that AI has, and the strong drive and statements from everyone in the AI ecosystem, lead me to believe that Nebius is an incredible opportunity.
Even if costs are much higher than I model, the top-line growth is incredibly impressive!
At P/S of 8, Nebius could be a $200-300B company in 2030.
Conclusion
In conclusion, Nebius AI Cloud and AI refinery business is uniquely positioned for an absolutely mindboggling growth in the next decade!
The recent deals with Microsoft and Meta elevate their pedigree in the eyes of investors, bankers, employees, AI start-ups, other Hyperscalers, and other participants of the AI ecosystem.
The new short-term deal strategy and the asset-light models position the company to generate significantly higher earnings than previously estimated.
At the same time, Nebius is doing small bolt-on acquisitions that strengthen the value proposition of its AI Cloud offering. Pure bare metal is not enough to attract high-quality customers, and Nebius is positioning itself to be the best AI cloud for AI start-ups and large organizations.
Moreover, questions regarding how Nebius will fund its aggressive business expansion have been resoundingly answered.
Customers are paying for services that will be delivered in 2027 and 2028 because they are desperate for high-quality compute and AI software, pushing Nebius deferred revenue liability to .
Lastly, the company will have 45W of contracted power by the end of 2026. It could be that my 4.2GW active IT power estimate for 2030 is conservative.
As the valuation model showed, Nebius could be situated to generate over $65B in revenues past 2030. If my estimates regarding segment margins, interest costs, operating expenses, and depreciation are close, we could be looking at a company printing close to $16B in profits.
In such a scenario, Nebius could become a $400-500B company, more than 7x from today!
Comments