The AI Infrastructure Capacity Race: Can Nebius Keep Up with Microsoft and CoreWeave?

Question

The AI infrastructure market is locked in a brutal capacity arms race, and Nebius (NBIS) is racing against the clock to avoid getting left behind.

The Bottleneck Problem

Here’s the situation: Nebius is literally selling out of capacity faster than it can build it. Q3 demand was so strong that every kilowatt of available power got snapped up instantly. Now every new capacity drop gets fully booked within hours. That sounds good on paper—until you realize it means revenue is being artificially capped.

Management admits capacity constraints are their biggest headache right now. So what’s their move? Go big or go home. By end-of-2026, they’re targeting 800 MW to 1 GW of fully operational power—a massive jump from where they are today. They’re also expecting 2.5 GW of contracted power by 2026, up from 1 GW just a few months ago.

The CapEx Bloodbath

This expansion doesn’t come cheap. Nebius just tripled their 2025 CapEx guidance from $2B to $5B. That’s real money going into data centers, GPUs, power infrastructure, and land. They’re financing this through debt, asset-backed deals, and equity—basically using every tool in the playbook.

The payoff? ARR is projected to hit $900M–$1.1B by end-2025, then explode to $7–9B by end-2026. For 2025 full-year group revenue, they’ve guided to $500–550M (down from the previous $450–630M range, mainly due to timing of when capacity actually comes online).

The Competitive Gauntlet

Microsoft is the 800-pound gorilla here. They’re ramping AI capacity by 80%+ in 2025 and doubling their entire data center footprint over two years. Azure’s expected to grow ~37% next quarter alone. Even with this aggressive buildout, Microsoft expects to be capacity-constrained through the end of fiscal 2025—meaning demand is still crushing supply across the board.

CoreWeave is also scaling aggressively, leveraging hyperscaler partnerships and federal contracts. But here’s the catch: they’re also supply-constrained. A delay in powered-rack delivery from a partner forced them to cut their 2025 revenue guidance to $5.05–5.15B (from $5.15–5.35B) and adjust operating income expectations downward to $690–720M.

The lesson? Even players with deep pockets and strategic relationships are bumping into the same wall: not enough power, not enough chips, not enough time to build fast enough.

The Valuation Puzzle

NBIS shares have jumped 144% in the past 6 months vs. only 6.9% for the broader Internet-Software-Services sector. Yet on a price-to-book basis, NBIS trades at 4.66X compared to the industry at 39.95X—meaning the market is pricing in execution risk.

There’s also been downward revision on 2025 earnings estimates over the past 60 days, and Zacks currently rates it a #4 Rank (Sell).

The Real Question

Nebius has the right strategy: build capacity faster than competitors can match. But execution matters. Power availability, supply chain stability, and the ability to deploy $5B+ capital efficiently will determine if they can actually close the gap with Microsoft and catch CoreWeave’s growth trajectory. If they pull it off, the upside is enormous. If execution falters, they could get squeezed in a market where capacity is king and time is running out.