Key Points
Nebius is acquiring more power and has an impressive software stack that helps it stand out from other neocloud providers.
The company earned $1.25 billion in annual recurring revenue in 2025 and is projecting up to $9 billion in ARR by the end of 2026.
Nebius has a $3.7 billion cash position to support its investments.
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Nebius Group (NASDAQ: NBIS) has a shot at producing a 1,000% return over the next decade, even after more than doubling in value over the past year. The neocloud provider is at the center of the artificial intelligence (AI) boom, offering gigawatts and AI data centers for customers.
While other companies just provide AI infrastructure and power, Nebius also offers software to train and run machine learning models. That helped Nebius secure a five-year deal with Microsoft (NASDAQ: MSFT) that can reach up to $19.4 billion in value. The deal covers approximately 300 megawatts.
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That's the brief summary of Nebius, but a deeper look shows the captivating long-term potential of this AI stock.
Image source: Getty Images.
Annual recurring revenue continues to surge
Nebius closed 2025 with $1.25 billion in annual recurring revenue (ARR) and told investors it expects to close 2026 with up to $9 billion. This ambitious projection comes as the company adds more gigawatts to its pipeline, which will help it win more contracts like the Microsoft deal.
The company anticipates having 3 gigawatts of contracted power by the end of 2026. It has already secured more than 2 gigawatts of contracted power. That type of power gives Nebius the capacity to support nine additional deals like the Microsoft agreement.
Nebius has $3.7 billion in cash that can help it accumulate more power and build additional data centers. It's also making strategic acquisitions to bolster its lead, especially on the software front. For instance, Nebius acquired Tavily, built for agent-native workflows, which will strengthen Nebius' software stack.
Tech giants need power for their AI ambitions
Microsoft isn't the only big tech company that works with Nebius. The neocloud provider also secured a deal with Meta Platforms, which is valued at $3 billion over five years. Nebius did not disclose the number of megawatts involved in the deal, but securing deals with two tech giants presents the neocloud provider as a top choice for future deals.
Research from Morgan Stanley suggests we are in the middle of a major electricity shortage for AI data centers. The research projects a 44-gigawatt shortage in 2028, with current AI data center sites insufficient. That means more companies will have to build data centers, and with energy being so scarce, that gives Nebius more pricing power.
It also comes at a time when AI data center providers are facing a shortage of skilled blue-collar workers. This shortage was a big deal before the AI buildout started, but a substantial increase in demand for these services underpins the difficulties new companies face in building AI infrastructure.
Nebius is ahead of the competition and has already completed AI infrastructure. It also has secured energy and is in the process of building more projects, putting it multiple years ahead of most competitors. Tech companies value speed and won't sit around for a few years for the supply to get better. They'll sign expensive deals with neocloud providers like Nebius to fuel their AI ambitions. That's a winning formula that can lead to a 10x return for Nebius stock.
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
