AI Computing Power Competition: Can Nebius Break Through the Capacity Bottleneck?

Speaking of the AI infrastructure sector, the most competitive aspect can be summed up in one word—capacity. Nebius (NBIS) is currently facing a typical dilemma: explosive demand, but capacity cannot keep up.

Production capacity has become a ceiling

In the third quarter, all of Nebius's capacity was sold out in seconds, and every new capacity that came online was snapped up instantly. Customers even started locking in longer-term contracts in advance—what does this indicate? It indicates that everyone is betting on the wave of NVIDIA Blackwell.

But the management also admitted: capacity constraints are eating into revenue growth. To break the deadlock, Nebius has made a significant investment:

• CapEx in 2025 will increase from 2 billion USD to 5 billion USD (a 2.5 times increase)
• Plan to achieve a contracted capacity of 2.5GW by the end of 2026 (previously only stated 1GW)
• By the end of 2026, there should be 800MW to 1GW of electricity truly connected to data centers.

This is using real money to smash production capacity. Financing channels include corporate bonds, asset-backed financing, and equity financing—all methods are being utilized.

Income target adjusted

The full-year revenue expectation for 2025 has been revised down from 450-630 million USD to 500-550 million USD. While it seems like a downgrade, it is actually a more conservative estimate by management regarding the timeline for production capacity coming online. However, the long-term goals remain unchanged: to reach an ARR of 900-1,100 million USD by the end of 2025, and a target of 700-900 million USD by the end of 2026.

The opponent's actions are fiercer

Microsoft is not catching up, it is crushing:

• AI production capacity will increase by more than 80% in 2025.
• The scale of data centers will double in the next two years.
• Azure revenue growth is expected to be 37% (constant currency)
• Even with such expansion, Microsoft still claims that its production capacity will be limited until the end of the fiscal year.

CoreWeave has experienced rapid growth, but it has also run into trouble—delivery delays from its data center partners have hindered progress, with revenue expectations for 2025 revised down from $5.15-5.35 billion to $5.05-5.15 billion.

The Difficulties of Reality

For NBIS to break through, two core issues must be resolved:

1. Power Supply: This is a hard constraint that cannot be quickly solved just by throwing money at it.
2. Supply Chain Stability: Chips, power supplies, land… any bottleneck in any link will delay production capacity coming online.

Moreover, to what extent is the AI infrastructure market currently competitive? The entire industry is competing for the same resources and customers, and capacity shortages have become a common phenomenon, not just an issue for Nebius.

How to view stock prices and valuations

In the past six months, NBIS has risen by 144%, while its peers in the industry have only increased by 6.9%. In terms of valuation, NBIS's P/B is 4.66X, which is significantly lower than the software industry's 39.95X, indicating that the market is still relatively cautious in its pricing—possibly due to concerns over capacity constraints.

Final Words

The essence of Nebius's story is: there is demand but capacity is limited. The solution is to invest heavily in expanding production, at the cost of short-term profit pressure. However, if the capacity can truly be built as planned, there is indeed significant long-term potential. But in the face of a monster-level competitor like Microsoft, whether they can maintain their customer share is a bigger question.