Meta Platforms (META 1.46%), a prominent player in the tech industry, is making significant strides in the realm of artificial intelligence (AI) by investing in the infrastructure necessary for its advancement. As one of the major hyperscalers, Meta is actively constructing data centers or acquiring computing capacity to support AI applications. In a recent development, Meta’s partnership with AI data center company Nebius Group (NBIS +2.56%) has raised expectations for both companies.
Nebius Group announced that it has secured a five-year contract with Meta to provide up to $12 billion in data center capacity. This agreement will leverage Nvidia’s next-generation graphics processing units (GPUs) and the Vera Rubin platform. Additionally, Meta is set to purchase up to $15 billion in further computing capacity from Nebius’s upcoming data centers over the next five years. The total value of this deal could reach $27 billion, marking a substantial commitment from Meta to bolster its AI capabilities.
Under the terms of the contract, Nebius will not only supply capacity to Meta but will also offer services to third-party cloud customers, positioning itself as a key player in the AI data center landscape. This collaboration builds on a previous agreement announced at the end of 2025, which involved $3 billion of capacity over a five-year span. The rapid succession of these agreements indicates a strengthening relationship between Nebius and Meta, underscoring the demand for AI infrastructure.
The implications of this deal extend beyond just capacity. Nebius’s agreement with Meta has the potential to surpass a prior contract with Microsoft, valued at $19.4 billion over five years. As a result, the new deal is expected to significantly enhance Nebius’s revenue projections. In 2025, Nebius reported an annual recurring revenue (ARR) run rate of $1.2 billion, with actual revenue reaching approximately $530 million. By 2026, the company anticipates revenue between $3 billion and $3.4 billion, with an ARR run rate expected to climb between $7 billion and $9 billion.
Although the Meta deal is not scheduled to commence until 2027, the initial $12 billion agreement alone could contribute an estimated $2.4 billion to annual revenue, assuming a steady distribution. This projection positions Nebius to potentially exceed a $10 billion ARR rate in 2027. Analysts at Visible Alpha estimate Nebius’s total revenue to be about $9 billion in 2027, increasing to $14 billion by 2028. With the Meta contract, these estimates appear increasingly attainable.
Currently trading with a market capitalization around $33 billion, Nebius is perceived as a compelling investment based on its revenue potential, despite the extended timeframe needed for profitability. The company reported positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2025. However, investors are advised to scrutinize these figures, as they may be influenced by stock-based compensation and other adjustments common in the data center and GPU sectors.
Investors seeking exposure to the AI sector may find value in companies like Nebius, which not only boasts a robust data center network but also has interests in other AI ventures. Nonetheless, the market for data center stocks remains speculative, particularly as many players, including Nebius, have experienced significant stock price increases in a short time. Caution is advised for those considering substantial investments in this space as the landscape continues to evolve rapidly.
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