Nebius Group opens coverage at Watchlist following second-quarter results released before the open on August 12.

What the quarter showed

The print was good rather than remarkable. Revenue of $582.3 million rose 454% year over year, beating the $569.9 million consensus by 2.2%, and the GAAP loss of $0.68 per share came in four cents better than expected. Annualised run-rate revenue reached $3.0 billion, up 56% in three months. Full-year 2026 guidance was reaffirmed rather than raised.

What actually moved the stock

A 2.2% revenue beat does not produce a 34% single-session gain. The earnings call does. Management disclosed four AI cloud contracts closed in the quarter, each averaging more than $1 billion, priced at $20 million to $25 million per megawatt with customer prepayments covering 50% to 60% of the associated capital cost. A first capacity auction cleared 15% above any price the company had previously charged. Short-duration training engagements are being negotiated at roughly double the mid-term rate. The contracted power target rose to 5 gigawatts, and the chief executive said all of 2027 capacity could be sold today on terms already in hand. None of that appeared in the press release.

The number that needs care

Adjusted EBITDA of $236.2 million, a 41% margin, becomes a $175.9 million GAAP operating loss once depreciation at 45% of revenue and share-based compensation at 18% are charged. That depreciation rests on an asset base about to roughly double: property and equipment rose from $5.55 billion to $13.05 billion in six months, against capital expenditure guidance of $20 billion to $25 billion for the year.

Cash tells a similar story. The headline $2.25 billion of operating cash flow was $2.03 billion working capital, principally customer prepayments and a one-time receivables collection. Underlying generation was nearer $215 million, and free cash flow was negative $3.4 billion for the quarter.

Why this is not yet a Buy

Nebius now carries a market capitalisation near $69 billion against CoreWeave’s $59 billion, on roughly a quarter of the revenue and 40% of the backlog. The market pays $1.73 per dollar of Nebius backlog against $0.57 for that peer, and the shares closed above the $255.44 average analyst target. A probability-weighted fair value of $261 sits under 3% above the price, which is noise on a stock whose average true range is 10.2%.

The business is executing and the bull case is real. The price simply arrived first. Formal 2027 guidance, promised later this year, is the event that settles it.

Scorecard, scenario detail and the full technical work are set out in the complete Nebius Group (NBIS) report on our Reports page.