Nebius’ AI infrastructure boom is bringing it deeper into Israel
The Nasdaq-listed company beat revenue estimates and secured four AI cloud contracts worth more than $1 billion each, while expanding aggressively across Israel’s computing and startup ecosystem.
Nebius’ latest results offer a glimpse of the scale of the AI infrastructure boom, and of how deeply the company has become tied to Israel.
The Nasdaq-listed cloud company reported second-quarter revenue of $582.3 million on Wednesday, beating analysts’ expectations of $572.75 million, as revenue from its core AI cloud business nearly sextupled. Its shares rose 34% following the results, giving it a market cap of over $65 billion.
The numbers underscore the extraordinary demand for computing capacity behind the artificial intelligence industry. Nebius signed four AI cloud contracts worth more than $1 billion each during the quarter, while the total value of its contracted business nearly quadrupled. Contracts with new customers increased more than ninefold.
Yet the company’s expansion is not limited to the United States and Europe. Israel has become an increasingly important part of Nebius’ strategy, both as a market for AI infrastructure and as a source of technology and talent.
The company has acquired Israeli startup Tavily for an initial $275 million, with the transaction potentially reaching $400 million. It is also building a substantial physical infrastructure footprint in Israel and was selected by the Israel Innovation Authority to establish the country’s national AI supercomputer.
At the center of the company is Arkady Volozh, the co-founder and CEO of Nebius and one of the most unusual figures in the global technology industry. Volozh, who built his fortune through Yandex, Russia’s dominant internet company, moved to Israel before the Covid-19 pandemic and became an Israeli citizen. After Russia’s invasion of Ukraine and his public condemnation of the war, he separated himself from Yandex’s Russian business as part of the restructuring that created Nebius.
That history has given Nebius a particularly unusual connection to Israel. The company is formally headquartered in Amsterdam, but it is increasingly building assets and operations in Israel.
Nebius’ latest results suggest that, for now, the biggest constraint facing AI companies is not demand but the ability to provide enough computing capacity.
Volozh said demand remains well ahead of supply and that Nebius could sell all of the capacity it plans to bring online in 2027 at current terms.
The company raised its contracted power target for 2026 to 5 gigawatts, from more than 4 gigawatts previously, and expects to deploy more than 1 gigawatt of capacity annually beginning in 2027. It said it expects more than $9 billion in customer prepayments this year and has more than $40 billion in customer commitments.
That expansion comes at enormous cost. Nebius spent about $5.7 billion on capital expenditures during the quarter, according to the figures provided, as it continued investing in GPUs and data centers.
The results came a day after rival CoreWeave raised its annual forecasts, reinforcing investor expectations that demand for AI computing remains greater than available supply.
The boom is also attracting new competitors, including companies such as Elon Musk’s xAI. But Volozh argued that the market remains undersupplied.
Nebius’ Israeli presence is already substantial by the standards of a company that only returned to Nasdaq at the end of 2024.
Seven months ago, Nebius signed an agreement with Mega Or, through its subsidiary Mega DC, under which two data centers are being built in Masmiyya and Beit Shemesh. Together, they are expected to provide 80 megawatts of capacity.
The construction cost of the two facilities was estimated at approximately $880 million. Under the five-year agreement, Nebius will receive data center services from the two sites, with an option to extend the arrangement.
The Masmiyya facility is expected to provide 22 megawatts, while Beit Shemesh will provide 58 megawatts. The first capacity is expected to come online in the third quarter of 2026, with the Beit Shemesh facility delivered in stages through the first quarter of 2027.
The deal followed an earlier agreement for another 8 megawatts at Mega Or’s data center in Modi’in.
