Nebius Group ( NASDAQ : NBIS ) The stock price fell by nearly 12% in pre-market trading on November 12th. Despite the artificial intelligence cloud service provider announcing a 571% year-on-year increase in revenue for the third quarter, management lowered its revenue forecasts for 2026 due to delays in computing capacity.
According to the company's official financial reports, Nebius achieved revenue of $980.8 million in that quarter, which is higher than the $146.1 million from the same period last year and also exceeds Wall Street's forecast of around $908 million.
Nebius Revenue soars by 571%, AI Cloud demand accelerates
Nebius reports that AI's cloud revenue amounted to 973.8 million US dollars, accounting for approximately 99% of the total sales for that quarter, with a year-on-year increase of 643%.
As of the end of September, its annualized revenue reached $6.4 billion, more than doubling from $3 billion in June.
However, approximately $325 million of the revenue for that quarter came from non-recurring arrangements, which involved deploying Nebius technology on third-party infrastructure.
This distinction is important because this portion of the contribution has driven the growth shown in the report, but it does not necessarily represent repeatable cloud consumption.
Before the latest performance report was released, a comparison between Nebius and CoreWeave highlighted the importance of financing costs and infrastructure utilization rates for AI cloud service providers.
Nebius also disclosed that the remaining performance obligations amount to $38.7 billion, reflecting the considerable scale of future business that has been contracted for.
Why does the stock price still fall after Nebius reports strong financial results?
A letter to company shareholders explains that some of the third-party computing power capacity that was originally expected to be put into production in 2026 has been postponed to the first half of 2027.
Therefore, Nebius now expects its annual revenue to come close to the lower end of the previous guidance range of $3 billion to $3.4 billion.
Management also postponed the goal of achieving an annualized revenue operating rate of over $7 billion from December to February.
At the same time, the company's capital expenditure forecast for 2026 has been raised from $20 billion to $25 billion to approximately $27 billion.
The higher expenditure commitments have also intensified the concerns previously raised by the outside world regarding Nebius's return to the debt market to finance its rapidly expanding AI infrastructure.
Despite the recent downward revision of guidance, management still expects revenue to reach $12 billion to $13 billion in 2027, and capital expenditures to reach $40 billion to $45 billion.
Can Nebius, which has NVIDIA's support, secure financing for expansion?
Nebius It is anticipated that customer prepayments and asset-backed financing will cover approximately 75% to 85% of their capital expenditures for 2027.
This financing strategy builds upon NVIDIA's $2 billion investment in the company earlier this year.
However, the heavy capital requirements remain the core issue for the entire AI infrastructure business.
Competitor CoreWeave recently announced a quarterly revenue increase of 168% year-on-year, but its borrowing costs and debt burden continue to rise as well.
As investors question whether long-term contracts can be converted into sustainable profits fast enough, the debate surrounding infrastructure financing for AI is also intensifying.
