Known as a major hyperscaler, meta platform (meta 1.46%) is one of several large technology companies that is essentially funding the infrastructure needed to power the deployment of artificial intelligence (AI). One way hyperscalers do this is by building data centers or purchasing computing power for centers designed to run AI applications.
Recently, Meta provided some surprising news for an AI data center stock.
Image source: Getty Images.
5 year large contract
Recently, AI data center companies have nevius group (NBIS +2.56%) announced a five-year agreement with Meta to provide the Magnificent Seven technology giants with capacity across multiple of their data centers.
Under the agreement, Nebius will provide $12 billion of capacity in its data centers. Nvidia‘s next-generation graphics processing unit (GPU) and platform is called Vera Rubin. Meta also plans to purchase up to $15 billion worth of additional computing power in other Nebius data centers that open over the next five years.
Nebius plans to sell this capacity to third-party cloud customers, while Meta will purchase the remaining capacity. The deal between Nebius and Meta totals $27 billion. The former will build data centers equipped with Nvidia’s latest platform and GPUs and rent them to companies looking to implement AI. Many of these customers are hyperscalers.
Nebius and Meta had already announced an initial agreement to provide $3 billion in capacity over five years at the end of 2025. Therefore, this second transaction, which took place just about four months after the first, bodes well for the relationship between the two parties.
This agreement will significantly increase Nebius’ revenue.
New meta deal could be bigger than Nevius’ previous deal microsoftcould be worth $19.4 billion over five years.
Therefore, the meta transaction should significantly increase Nebius’ medium-term revenue outlook. In 2025, Nvidia ended the year with an annual recurring revenue (ARR) run rate of $1.2 billion. Actual revenue in 2025 was approximately $530 million. Nebius’ management is targeting actual revenue of $3 billion to $3.4 billion and ARR run rate of $7 billion to $9 billion in 2026.
The Meta deal isn’t scheduled to begin until 2027, but even a $12 billion deal over the first five years, assuming it’s split evenly, would add $2.4 billion in annual revenue and should conservatively deliver an ARR rate of over $10 billion in 2027.
Analysts expect Nebius’ total revenue to be approximately $9 billion in 2027 and $14 billion in 2028, according to estimates from Visible Alpha. With the Meta contract, these estimates now look very likely to be exceeded.
Today’s changes
(2.56%) $3.04
current price
$121.60
Key data points
Market capitalization
30 billion dollars
daily range
$114.80 – $121.75
52 week range
$18.31 – $141.10
volume
515K
average volume
14M
gross profit
-765.63%
Trading with a market capitalization of around $33 billion as of this writing, Nebius isn’t exactly expensive if you focus on earnings. Although the company is expected to take longer to achieve profitability, it achieved positive earnings before interest, taxes, depreciation, and adjustment (EBITDA) in 2025. Investors should have some skepticism about adjusted EBITDA, as companies can essentially make any adjustments.
For example, in 2025, the majority of adjustments will come from stock-based compensation and depreciation, making data centers and GPUs a major point of contention as there is debate over the useful life of GPUs and other AI hardware.
I don’t think it’s a bad idea to have some exposure to data centers to get the potential benefits of AI. We also like Nebius not only because of its data center network, but also because the company owns other AI businesses. However, I still think buying data center stocks is speculative at this point. Many companies, especially like Nebius, see no need to invest heavily because their stock prices have already skyrocketed in a short period of time.
