Nebius surges 32% to BofA's $150 target on AI margin inflection
Bank of America initiates coverage with Buy rating as operating margins set to turn positive in FY2027
Nebius shares advanced in Tuesday trading after Bank of America Securities initiated coverage on the AI infrastructure company with a Buy rating and $150 price target, representing 32% upside from current levels. The bullish stance hinges on a projected operating margin inflection to positive territory in fiscal year 2027 as the company's GPU-as-a-Service business scales.
The stock, which closed at $113.52 on Tuesday, has gained 291% over the past year and now trades 14% above its 50-day moving average and 31% above its 200-day moving average. Nebius commands a market capitalization of approximately $29.8 billion, reflecting investor enthusiasm for its position in the rapidly expanding AI Infrastructure-as-a-Service market.
Analyst Tal Liani at Bank of America projects Nebius's revenue to surge 501% in 2026, followed by 199% growth in 2027 and 64% in 2028. The critical profitability milestone comes in fiscal year 2027, when operating margins are forecast to turn positive for the first time. Currently, the company reports a trailing 12-month operating margin of -1.03%.
The company's growth trajectory rests on substantial contractual commitments from major technology firms. Meta Platforms has committed up to $27 billion over five years for Nebius's advanced AI infrastructure, while Microsoft signed a multi-year $17 billion revenue agreement for computing capacity. Nvidia, the dominant AI chipmaker, invested $2 billion in March, acquiring an 8.3% stake in the Dutch-based company.
"Nebius is strategically positioned as one of the few platforms specifically built for GPU-dense distributed workloads," Bank of America analysts wrote in their initiation note. The company's differentiated architecture interconnects GPUs across multiple locations as a unified system, enhancing computing efficiency for scaling AI workloads.
The total addressable market for AI Infrastructure-as-a-Service is projected to exceed $419 billion by 2028, driven by increasing model complexity and accelerated enterprise adoption of AI. Nebius enables companies to train and run AI models without requiring massive upfront infrastructure investments, positioning it as a competitive alternative to traditional hyperscalers like Microsoft Azure and Oracle Cloud.
Nebius emerged from a complex restructuring of Russian technology giant Yandex, rebranding and listing on Nasdaq under the ticker NBIS in October 2024. The company shed its Russian assets following geopolitical tensions and sanctions, with co-founder Arkady Volozh assuming the role of chief executive officer of the newly focused AI infrastructure business.
The company's infrastructure expansion has been aggressive. Nebius reported approximately 170 MW of active power at the end of 2025, exceeding its target of 100 MW. Plans are in motion to reach 800 MW to 1 GW of connected power by the end of 2026 and more than 3 GW of contracted power by year-end. The company operates servers and data centers in Finland, France, and the United States.
Capital expenditures in the fourth quarter of 2025 reached approximately $2.1 billion, primarily driven by GPU purchases and data center expansion. Nebius raised $700 million from private investors in December 2024, including Nvidia's initial investment.
Analyst consensus remains strongly positive, with an average price target of $167.17—higher than Bank of America's $150 target. Among covering analysts, nine have issued Buy ratings (including two Strong Buy), two have Hold ratings, and one has a Sell rating.
The company's rapid revenue growth has been validated by recent financial results. For 2025, Nebius reported revenue of $529.8 million, representing 479% year-over-year growth. Its core AI infrastructure business achieved 385% year-over-year revenue growth, with the company targeting an annualized run rate revenue of $750 million to $1 billion by year-end 2025.
Beyond its core AI infrastructure business, Nebius Group includes autonomous vehicle company Avride, edtech platform TripleTen, and holds stakes in Toloka and ClickHouse. The company was also selected by the Israel Innovation Authority in May 2025 to build Israel's national AI supercomputer.