Nebius holds $9.3B cash to fund $25B AI infrastructure buildout

Nebius has amassed $9.3 billion in cash to fund a $25 billion AI infrastructure buildout as demand for compute capacity outstrips supply.

Nebius Group raised its 2026 capital expenditure target to as much as $25 billion, backed by a $9.3 billion cash reserve and multi-year commitments from Microsoft and Meta totaling more than $46 billion through 2031.

"Demand consistently exceeds supply, and available capacity is already selling out," Nebius management said during the first-quarter earnings call, noting that customer commitments for 2027 are already in place.

The company ended the first quarter with $9.3 billion in cash and equivalents, bolstered by a $4.3 billion convertible debt raise and a $2 billion equity investment from Nvidia. Operating cash flow reached $2.3 billion for the quarter, aided by customer upfront payments. Nebius now targets $7 billion to $9 billion in annualized recurring revenue by the end of 2026.

At roughly 8.5 times enterprise value to ARR and 6.2 times 2027 enterprise value to sales, Nebius trades at a premium to the broader software industry's 4.5 times forward sales — but the valuation reflects a supply-constrained market where the company is selling out capacity before it comes online.

Cash War Chest Funds Capacity Race

Nebius's $9.3 billion cash position provides financial flexibility to pursue both organic expansion and potential acquisitions. The company is tapping multiple funding sources, including asset-backed financing secured against its contracts with Meta Platforms and Microsoft, corporate-level debt, and an at-the-market equity program. The 2026 capex guidance of $20 billion to $25 billion, raised from an earlier $16 billion to $20 billion range, is tied directly to customer demand visibility.

The buildout is not speculative. Management said capacity deployment is linked to existing commitments, with most available compute already sold out. The company's Eigen AI platform and Token Factory integration, alongside enterprise deployments such as Revolut's production workload highlighted by Nvidia, signal a shift from pure infrastructure provider to full-stack AI platform.

Competitors Scramble to Keep Pace

Nebius is not alone in the spending race. CoreWeave held more than $3.3 billion in cash and marketable securities at the end of the first quarter and has secured more than $20 billion in debt and equity financing year to date. The company plans 2026 capital expenditures of $31 billion to $35 billion, also backed by a $2 billion Nvidia equity investment. Microsoft, the largest hyperscaler, reported $78.3 billion in cash and short-term investments as of March 31 and plans approximately $190 billion in capital spending for calendar 2026, including about $25 billion attributed to component pricing pressures.

The scale of investment shows the intensity of the AI infrastructure arms race. For Nebius, the key differentiator is capital efficiency: its $20 billion to $25 billion capex plan targets $7 billion to $9 billion in ARR by year-end, implying a roughly 3 times capital-to-revenue conversion ratio. CoreWeave's $31 billion to $35 billion capex implies a similar or higher ratio, though the company has not disclosed comparable ARR targets.

Investment Angle

Nebius shares have gained 40.6% in the past month, pushing the forward price-to-sales multiple to 10.6 times, more than double the internet software and services industry average of 4.5 times. The premium is justified if the company hits its $7 billion to $9 billion ARR target, which would imply roughly 8.5 times EV/ARR at current levels. But execution risk is material: any shortfall against those ambitious targets could trigger multiple compression. The Zacks Consensus Estimate for 2026 earnings has been revised upward over the past 60 days, reflecting growing confidence in the company's trajectory.

This article is for informational purposes only and does not constitute investment advice.