NBIS Eyes Positive EBITDA in H2 2025: What Could Drive Growth?

Core Insights - Nebius Group N.V. (NBIS) is projecting a return to positive adjusted EBITDA in the second half of 2025, driven by increasing revenues, global expansion, and a focus on technological innovation [1][9] - The company reported a significant year-over-year revenue increase of 385% in Q1 2025, reaching $55.3 million, and expects full-year revenues between $500 million and $700 million [4][9] - Nebius is enhancing its AI infrastructure with a $2 billion capital expenditure plan for 2025, up from an earlier estimate of $1.5 billion [3] Company Performance - Nebius is experiencing strong growth in its core AI business, benefiting from a full-stack approach that includes high-performance GPU cloud infrastructure and AI development tools [1] - The company has expanded its global infrastructure with data centers in the United States, Europe, and the Middle East, which is expected to enhance its market share in AI cloud computing [2][9] - Nebius has upgraded its AI cloud infrastructure significantly in Q1 2025, improving reliability and reducing downtime to boost customer retention [2] Competitive Landscape - Nebius competes with major players like CoreWeave, Inc. and Microsoft Corporation, both of which are also experiencing substantial growth in the AI cloud computing sector [6] - CoreWeave reported a 420% year-over-year revenue increase to approximately $981.6 million in Q1 2025, highlighting the competitive nature of the market [7] - Microsoft Corporation's operating income increased by 16% year-over-year, indicating strong performance among competitors [8] Financial Outlook - Despite the anticipated positive adjusted EBITDA in H2 2025, management has indicated that adjusted EBITDA will remain negative for the full year of 2025 due to high capital expenditures and operational costs [5] - Nebius expects EBIT margins to be in the range of 20% to 30% over the medium term, supported by the scaling of its AI cloud business [4] Market Performance - Shares of Nebius have increased by 85.4% year-to-date, outperforming the Internet – Software and Services industry's growth of 28.4% [10] - The company's shares are currently trading at a price/book ratio of 3.83X, lower than the industry's ratio of 4.25 [11]