Citigroup maintains its buy/high-risk rating on Nebius with a target price of $278, stating that the core of Nebius' growth lies in the pace of capacity delivery and the demand for AI cloud business. Nebius' Q2 revenue was driven by asset SLA revenue, Token Factory, Tavily, and high utilization, with order backlog growth coming from its core AI cloud business. NVIDIA's $50 million AI infrastructure financing plan, CoreWeave's financial report, and Lumentum's guidance have driven market attention to Neoclouds. Nebius has approximately 50% -60% of its capital expenditures supported by customer prepayments, with a payback period of approximately 10 months for the project. Nebius expects most of the contracted production capacity to go online in the second half of 2026, with an ARR framework of $700000 to $900000 driven by utilization, pricing, and capacity growth. Citigroup reminds Nebius of risks such as customer concentration, high capital expenditure intensity, and uncertain GPU supply.
