Can Nebius Overcome its Capacity Bottleneck?

Question

Nebius Group (NBIS) faces a dilemma of "problematic luxuries": the demand for AI infrastructure is so fierce that it depletes all its capacity as soon as it becomes available. In Q3, it sold 100% of its available power. Now, with NVIDIA&#39;s Blackwell generation ramping up, customers are securing capacity earlier and for longer terms.## The Aggressive Strategy: From 1 GW to 2.5 GWTo break this bottleneck, NBIS tripled its 2025 CapEx guidance: **from $2  billion to $5  billion**. The goal is brutal: to reach 2.5 GW of contracted power by 2026 ( vs. 1 GW reported in August ). In parallel, it plans to have 800 MW to 1 GW fully connected to its data centers before the end of 2026.The reward is proportional to the risk. NBIS projects:- **2025**: $500–$550M  in group revenues ( revised from $450–$630M)- **End 2025**: $900M–$1.1B in annualized ARR- **End 2026**: $7B–$9B  in ARRBut here is the problem: obtaining sufficient power and stabilizing supply chains are real obstacles. Furthermore, the AI infrastructure market is becoming denser.## The Competition Accelerates Too**Microsoft**: plans to increase AI capacity longer than 80% by 2025 and double data centers in two years. Azure will grow ~37% in fiscal Q2. Still, Microsoft admits it will remain constrained in capacity throughout the fiscal year.**CoreWeave**: also limited by supply, although with explosive demand. It reduced its 2025 outlook to $5.05–$5.15B in revenue ( vs. $5.15–$5.35B previously ) due to delays in infrastructure deliveries.## Valuation: Opportunity or Trap?NBIS increased by 144.2% in six months ( vs. 6.9% of the software sector ). However, it trades at **4.66X price/book** ( well below the 39.95X of the sector ), suggesting possible valuation appeal. Zacks assigns it a #4 rating ( Sell ), with bearish revisions on 2025 earnings estimates.**The verdict**: If it manages to unlock that capability and execute without disruptions, margins can explode. But in the short term, the execution of $5B  in CapEx and the race against Microsoft/CoreWeave are the real game.