Can South Wales Deployment Help Nebius Expand Its AI Cloud Footprint?

The race to build AI infrastructure is rapidly accelerating, and South Wales has been designated a U.K. AI Growth Zone. The recent agreement between Vantage Data Centers and Nebius Group N.V. NBIS is set to drive this transformation, bringing high-density, NVIDIA NVDA-powered AI infrastructure to Vantage’s CWL1 campus in Newport.

Per the deal, NBIS plans to lease high-density capacity at Vantage’s CWL1 campus to support a broad range of workloads, including AI training, inference, agentic AI and enterprise applications. The infrastructure will serve a diverse customer base ranging from startups and researchers to large enterprises and public-sector organizations. The move forms part of Nebius’ much larger U.K. expansion strategy. In June, NBIS announced approximately £1.7 billion of committed capacity buildout across four U.K. sites. Newport expands Nebius’ U.K. capacity while diversifying its AI cloud footprint.

The deployment will leverage NVIDIA’s latest full-stack, end-to-end DSX AI factory reference design. NVIDIA’s AI factory approach is designed to optimize these components as an integrated system. For Nebius, deploying NVIDIA-powered infrastructure in a purpose-built, high-density facility can accelerate the deployment of new AI capacity while giving customers access to a familiar, highly optimized technology stack. NBIS’ second-quarter revenue grew 454% year over year, with adjusted EBITDA margin rising to 41%, driven by high-margin capacity sales and early investments.

Nebius aims to reach 5 GW of contracted power by year-end, with plans to deploy more than 1 GW annually in 2027. Construction of data centers is progressing well, with recent innovations such as asset-light partnerships to scale capacity faster. Deals worth more than $20 million per MW with less than two-year payback will start online in late fourth quarter.

Competition Heats Up for NBIS in the AI Cloud Race

Microsoft's MSFT AI investments are converting into measurable commercial traction across its stack. Multi-model flexibility, paired with continued access to OpenAI's frontier models under an IP arrangement extending to 2032, allows customers to optimize cost and performance while keeping Microsoft central to their AI infrastructure decisions. With demand still outpacing available capacity, this positioning across AI infrastructure, tooling and applications should continue widening Microsoft's addressable opportunity heading into fiscal 2027. In May, Microsoft signed new agreements with U.S. and U.K. government partners — the Center for AI Standards and Innovation and the AI Security Institute — to advance AI testing and safety evaluation frameworks.

NBIS’ direct competitor, CoreWeave, Inc. CRWV, is expanding its global infrastructure as demand for AI cloud services continues to strengthen across sectors, geographies and workloads. In June, CRWV announced a new colocation agreement with Conapto, a provider of scalable, secure and sustainable data center solutions. The partnership covers two data center campuses in Stockholm, Sweden, with initial capacity already operational at the Stockholm 4 South facility. Both campuses will be powered by renewable energy, supporting CoreWeave's efforts to expand its AI cloud infrastructure in Europe while maintaining a focus on sustainability. CoreWeave reported record revenue of $2.6 billion, up 112%.

NBIS Price Performance, Valuation and Estimates

Shares of Nebius have gained 204.7% year to date compared with the Internet – Software and Services industry’s growth of 21%.

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In terms of price/book, NBIS’ shares are trading at 8.91X, higher than the Internet Software Services industry’s 4.2X.

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The Zacks Consensus Estimate for NBIS’ earnings for 2026 has been revised downward over the past 60 days.

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NBIS currently carries a Zacks Rank #4 (Sell).

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This article originally published on Zacks Investment Research (zacks.com).

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