Goldman Sachs revisits Nebius stock price target after earnings
Most investors have never heard of Nebius Group (NBIS). But that is about to change.
To those who knew of NBIS and paid attention to it: Congratulations, you knew where to look.
The Amsterdam-headquartered AI cloud company reported first-quarter 2026 results on May 13 that were, in a word, stunning.
Revenue of $399 million represented 684% year-over-year growth. The AI business specifically grew 841%. Adjusted EBITDA swung from a $54 million loss a year ago to $130 million positive. And the company shared it had secured 1.2 gigawatts of power and land for a new AI factory in Pennsylvania.
NBIS closed the earnings day up 15.72% to $207.27, according to Yahoo Finance. Impressively, the stock is up 147.62% year to date and 487.67% over the past year.
"We continue to see unprecedented demand across the market," Nebius wrote in its shareholder letter. "Compute and cloud needs are vastly exceeding capacity as more industries embrace AI."
Goldman Sachs reiterates buy rating on Nebius after breakout quarter
Goldman Sachs reiterated its buy rating and $205 price target on Nebius (NBIS) in a note shared with TheStreet following the results, expecting an initial positive share price reaction. Given the 15% single-session move, that expectation was validated immediately.
The headline revenue beat of 7% above Visible Alpha consensus, as confirmed by Investing.com, was driven by three simultaneous tailwinds: capacity scaling, strong pricing, and high utilization.
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All three moving together is rare and meaningful. It suggests Nebius is not discounting to fill capacity — it is filling capacity at premium prices because demand exceeds supply.
My review of the annualized recurring revenue progression tells the story efficiently. ARR reached $1.92 billion at the end of March 2026, up more than 50% from $1.25 billion at the end of December 2025 and representing a $670 million sequential gain in a single quarter. The company's revenue in Q1 2026 increased approximately 1.7 times quarter over quarter ($227.7 million Q4 2025).
Nebius also raised its contracted power target for year-end 2026 to more than 4 gigawatts, up from a prior target of more than 3 gigawatts, and has already secured 3.5 gigawatts of that new target, according to the letter to Shareholders.
Nebius's Q1 2026 results showed it scaling at a pace most AI peers only talk about
The key financial metrics from Nebius's May 13 earnings release:
- Total revenue of $399 million, up 684% year over year and 75% quarter over quarter
- Nebius AI revenue of $390 million, up 841% year over year, representing 98% of total revenue
- Adjusted EBITDA of $130 million, with an adjusted EBITDA margin of 45%
- GAAP EPS of $2.11, exceeding analyst expectations
- Annual recurring revenue of $1.92 billion for the AI business
Source: Nebius Q1 2026 earnings results, shareholders' letter
The EBITDA margin expansion is what stands out most to me. Nebius nearly doubled its adjusted EBITDA margin quarter over quarter, from roughly 23% to 45%. Management described a trajectory toward 20% to 30% EBIT margins over time.
For a company growing at triple-digit rates, achieving margin expansion simultaneously is the hallmark of genuine operating leverage, not growth-at-any-cost spending.
The company reiterated guidance for annual recurring revenue of $7 billion to $9 billion by year-end 2026, with full-year revenues of $3.0 billion to $3.4 billion.
Infrastructure bet, strategic acquisitions redefine what Nebius actually is
The Pennsylvania announcement matters beyond the headline gigawatt figure. According to the letter, Nebius is building its own AI factory infrastructure, not just leasing third-party cloud capacity and reselling it.
That distinction gives the company significantly more control over its cost structure, its capacity roadmap, and ultimately its margins as scale increases.
Related: Bank of America revamps Nebius stock price target ahead of earnings
The company also raised its 2026 capital expenditure guidance to $20-$25 billion. That commitment reflects genuine confidence in the demand pipeline.
A $27 billion five-year contract with Meta Platforms and a $2 billion Nvidia investment provide both revenue visibility and strategic validation that the largest names in AI are betting on Nebius as infrastructure.
Three acquisitions announced in the quarter deepen Nebius's positioning beyond raw compute.
- Acquisition of Tavily to expands agentic search capabilities
- Acquisition of Eigen AI to strengthen the Nebius Token Factory managed inference platform
- Acquisition of Clarifai to bring inference and compute orchestration technology, along with engineering talent that establishes Nebius's Bay Area presence
Source: Nebius shareholders’ letter
"We are not simply responding to where the industry stands today," Nebius CEO Arkady Volozh said in the shareholder letter. "We have the knowledge and experience to build the infrastructure, tools, and capabilities for where it will be tomorrow."
That is a confident statement, and the Q1 numbers suggest it is not an empty one.
Related: Bank of America revamps Nvidia-backed CoreWeave and Nebius stocks
