Will Nebius' $5B CapEx Spike Weigh on Its 2025 EBITDA Targets?

Core Insights - Nebius Group N.V. (NBIS) has significantly increased its capital expenditure (capex) plan for 2025 from $2 billion to $5 billion to meet the rising demand for AI infrastructure [1][10] - The company aims to exit 2025 with positive adjusted EBITDA at the group level, despite a projected adjusted EBITDA loss of $5.2 million for Q3, which is an improvement from a $45.9 million loss in the same quarter last year [3][10] - Financing for this aggressive expansion will be sourced through corporate debt, asset-backed financing, and equity, with plans to raise up to 25 million Class A shares [4][10] Capex Breakdown - The strategic capex allocation includes approximately 1% for securing land and power, 18-20% for building data centers, and around 80% for GPU deployment [2] - The accelerated investment is crucial for achieving ambitious annual recurring revenue (ARR) targets for 2025 and 2026, contingent on effective execution and sustained AI demand [5] Competitive Landscape - CoreWeave, a competitor, has reduced its 2025 capex guidance from $20-23 billion to $12-14 billion, while Microsoft is expected to increase its capex growth rate in fiscal 2026 compared to fiscal 2025 [6][7][8] - Microsoft allocated $34.9 billion in capex in Q1 of fiscal 2026, with significant investments in GPUs and CPUs to support its Azure platform [8] Market Performance - Nebius shares have declined by 6% over the past month, contrasting with a minor decline of 0.2% in the Internet – Software and Services industry [11] - The price/book ratio for NBIS shares stands at 5.38X, exceeding the industry average of 3.96X [13]