Competitive orders and strong pricing drive upward revisions to Nebius estimates, with the 12-month price target raised to $328

Overview

The report updates Nebius's earnings forecasts and valuation. Its core view is that demand for AI infrastructure is strong, competitively won orders validate customer appeal, capacity acquisition and construction are accelerating, customer prepayments and contract backlog provide financing support, and pricing, utilization, and the asset-light business are expected to improve long-term margins. Based on these developments, Goldman Sachs raises its medium- to long-term forecasts and price target and reiterates its Buy rating.

Core views

First, customer orders and pricing have improved demand visibility. Nebius's second-quarter revenue benefited from higher utilization and increased contributions from higher-margin, asset-light products such as Token Factory and recent acquisitions. During the same period, the company secured four landmark billion-dollar contracts, all resulting from competitive selection processes: although the customers had incumbent suppliers, they still selected Nebius to meet next-generation demand. Second-quarter transaction prices exceeded $20 million per megawatt, with project payback periods of less than two years. These contracts are expected to begin contributing revenue from the end of the fourth quarter and provide a pricing reference through early 2027. The company is also negotiating short-term capacity agreements with terms of up to six months and prices of $40 million—$50 million per megawatt, which the report expects to become a meaningful source of revenue in 2027 and beyond. Second, capacity construction is accelerating as access to power improves. Capacity deployed at the end of the second quarter is expected to begin generating revenue in the third quarter. Existing customer commitments and capital investment have increased visibility into 2026 construction and are laying the groundwork for significantly larger-scale deployments in 2027. Nebius has deliberately refrained from contracting some of its 2027 capacity, reflecting management's confidence in future pricing. Building construction at the Vineland, New Jersey project was completed earlier that summer, and engineering equipment installation is progressing. The switch to Bloom fuel cells can provide reliable, low-emission power and help unlock and accelerate the development of subsequent sites. The company has secured hundreds of megawatts of behind-the-meter generation resources, raised its FY26 contracted power target from more than 4GW to 5GW, and plans to deploy more than 1GW of capacity annually going forward. The company is also adding Arm CPU deployments alongside GPU clusters to meet demand from new agentic workloads, which Goldman Sachs believes will strengthen its competitive offering. Third, customer prepayments and contract backlog create multiple layers of financing channels. Operating cash flow has already turned positive and is expected to grow with scale. Customer prepayments in second-quarter contracts can cover approximately 50%—60% of the associated capital expenditure, and management aims to increase this coverage further. Approximately 70% of second-quarter transactions included prepayments, providing more than $9 billion in upfront funding for 2026. Long-term contracts with investment-grade customers can also be used for asset-backed financing, and the company has approximately $40 billion of committed contract backlog that can serve as a financing base. In July, Nebius secured its first $775 million asset-backed loan, supported by contracted cash flows and carrying a mid-single-digit interest rate. Management believes this structure can be replicated across additional customer contracts. If further funding is needed, the company could also consider corporate debt and equity-linked financing. Fourth, utilization, business mix, the asset-light model, and pricing collectively support long-term margins. New capacity is essentially sold out as soon as it comes online, while higher utilization and improved infrastructure efficiency are driving profitability. High-value cloud services such as inference and agentic solutions are expected to account for a larger share of revenue and contribute positively to group margins. Under the newly introduced asset-light partnership model, partners finance, build, and operate the infrastructure, while Nebius provides the full-stack platform and customer demand, enabling it to generate high-margin revenue with less balance-sheet capital. Most contracts also allow the company to shift workloads among different capacity sites within the same region, reducing dependence on any single site and improving utilization. A recent auction of Blackwell GPU capacity cleared at a price 15% above the previous peak, further demonstrating a robust pricing environment. Management expects capacity from Nebius-owned data centers to begin improving margins in the second half of 2027, joining utilization, pricing, and revenue mix as drivers of margin expansion. Regarding forecasts, Goldman Sachs maintains its FY26 revenue forecast but raises its 2027—2030 revenue forecasts by 2%—3% due to improved customer appeal, pricing, and contract economics in the core AI business. Reflecting changes in revenue and business-mix assumptions, FY26—FY30 gross profit forecasts increase by 1%—3%. Adjusted EBIT forecast changes range from -1% to +8%, reflecting updated revenue, gross margin, and operating expense assumptions. EBITDA estimates over the forecast period increase by 1%—3%, corresponding to changes in EBIT, stock-based compensation, and depreciation and amortization assumptions. Regarding valuation, Goldman Sachs reiterates its Buy rating and raises its 12-month price target from $286 to $328. The new price target is based on applying a 7x EV/Sales multiple to 2HCY27+1HCY28E sales, versus the previous 9x EV/Sales multiple applied to CY27E sales. The change in the valuation multiple framework primarily reflects the forward roll of the valuation period, while the price target is also supported by higher sales forecasts. The principal risks explicitly identified in the report are competitive pressure from hyperscale cloud providers, slower-than-expected AI adoption, and reduced business visibility due to short-term contracts.

Analysis framework

Goldman Sachs first analyzes order competitiveness, utilization, and capacity pricing based on management's latest information, then examines power procurement, data center construction, and the pace of deployment to assess the ability to realize revenue. The report subsequently evaluates funding sources for expansion by considering customer prepayments, contract backlog, operating cash flow, and asset-backed loans, while assessing the margin trajectory through utilization, cloud service mix, asset-light partnerships, and the commissioning of company-owned data centers. Finally, Goldman Sachs adjusts its FY26—FY30 revenue and profit forecasts accordingly and updates its 12-month price target using a rolled-forward EV/Sales valuation period.

Methodology notes

• Industry/Sector Analysis FrameworkSupply-demand framework

  AI Infrastructure Capacity Supply-Demand Analysis

  The report treats competitively won orders, capacity selling out as soon as it comes online, and customer demand as evidence of demand. It combines these factors with power access, data center construction, and the reservation of 2027 capacity to analyze the pace of supply and assess future revenue and pricing.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Decomposition of Capacity, Utilization, and Unit Capacity Pricing

  The report separately examines volume growth from deployed capacity and utilization, as well as pricing changes reflected in per-megawatt contract prices and GPU capacity auction prices, and then uses these factors to update its revenue and margin assessments.

• Valuation Method

  EV/Sales Valuation and Valuation-Period Roll-Forward

  Goldman Sachs applies a 7x EV/Sales multiple to 2HCY27+1HCY28E sales and calculates the price target using higher sales forecasts. Compared with the previous 9x EV/Sales multiple applied to CY27E, the change in the multiple framework reflects the forward roll of the valuation period.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Nebius Group (NBIS.US)

  Improving AI infrastructure demand, capacity expansion, pricing, and contract financing conditions directly underpin the report's higher forecasts and price target.

  Strengths

  Strong competitive customer orders, with capacity essentially sold out as soon as it comes online; robust pricing; an expanded scale of contracted power; diversified financing channels provided by customer prepayments, contract backlog, and asset-backed loans; and an asset-light platform model that helps reduce capital intensity and improve margins.

  Weaknesses

  Some capacity contracts have relatively short terms, reducing visibility into long-term revenue; large-scale capacity construction remains dependent on continued access to power, infrastructure execution, and financing arrangements.

  Comparison

  All four billion-dollar contracts secured in the second quarter were won competitively despite customers having incumbent suppliers, demonstrating Nebius's ability to capture incremental next-generation demand.

  Risks

  Competitive pressure from hyperscale cloud providers, slower-than-expected AI adoption, and reduced visibility due to short-term contracts.

Key data

• Landmark Second-Quarter ContractsFour billion-dollar contractsAll represented incremental next-generation demand won in competition with customers' incumbent suppliers
• Second-Quarter Transaction PricingMore than $20 million/MWPayback periods of less than two years, with revenue contribution expected to begin at the end of the fourth quarter
• Short-Term Capacity Agreement Pricing$40 million—$50 million/MWAgreement terms of up to six months, with revenue contribution expected in 2027 and beyond
• FY26 Contracted Power Target5GWPrevious target was more than 4GW
• Future Annual Capacity Deployment TargetMore than 1GW/yearBased on recent progress in construction execution
• Customer Prepayment CoverageApproximately 50%—60% of associated capital expenditureApplies to second-quarter contracts; management plans to increase it further
• Share of Transactions Including PrepaymentsApproximately 70%Based on contracts completed in the second quarter
• 2026 Upfront FundingMore than $9 billionFrom prepayment arrangements in second-quarter contracts
• Committed Contract BacklogApproximately $40 billionCan serve as a basis for asset-backed financing
• First Asset-Backed Loan$775 millionSecured in July, supported by contracted cash flows, with a mid-single-digit interest rate
• Blackwell GPU Auction Price15% above the previous peakIndicates that capacity pricing remains well supported
• 2027—2030 Revenue Forecast RevisionRaised by 2%—3%FY26 revenue forecast remains unchanged
• FY26—FY30 Gross Profit Forecast RevisionRaised by 1%—3%Reflects changes in revenue and business-mix assumptions
• FY26—FY30 Adjusted EBIT Forecast Change-1% to +8%Reflects updated revenue, gross margin, and operating expense assumptions
• Forecast-Period EBITDA RevisionRaised by 1%—3%Reflects changes in EBIT, stock-based compensation, and depreciation and amortization assumptions
• 12-Month Price Target$328Previous: $286
• Valuation Multiple7x EV/SalesApplied to 2HCY27+1HCY28E sales; previously 9x on CY27E

Impact & implications

The report believes that competitively won orders and high pricing improve visibility into Nebius's future demand and revenue, while accelerated power access and capacity construction expand the scope for business realization. Customer prepayments, contract backlog, and asset-backed financing can alleviate the funding needs associated with rapid expansion. Meanwhile, asset-light partnerships, high-value cloud services, intraregional workload allocation, and the commissioning of company-owned data centers are expected to drive long-term margin improvement. These factors support Goldman Sachs's increases to its 2027—2030 revenue and related profit forecasts and its higher price target.

Risks

• Competitive pressure from hyperscale cloud providers could weaken Nebius's ability to win orders or maintain pricing.
• Slower-than-expected AI adoption could affect capacity demand and revenue growth.
• Shorter-term contracts could reduce visibility into future revenue and capacity utilization.

What to watch

• Monitor whether capacity brought online at the end of the second quarter begins contributing revenue as expected in the third quarter.
• Watch whether second-quarter contracts priced above $20 million per megawatt begin contributing revenue at the end of the fourth quarter.
• Track progress toward reaching 5GW of contracted power in FY26 and deploying more than 1GW of capacity annually thereafter.
• Monitor whether actual deployment in 2027 is significantly larger than in 2026 and whether currently uncontracted capacity achieves better pricing.
• Watch whether customer prepayment coverage of capital expenditure can increase further from approximately 50%—60%.
• Monitor whether capacity from Nebius-owned data centers begins driving margin improvement in the second half of 2027.