THE ALPS MUST BE FULL OF GPUS

(NBIS), (MSFT), (META)

A friend of mine in the semiconductor world once remarked that GPUs had become so scarce that someone could make a living smuggling H100s across borders in diplomatic pouches. It was meant as a joke, although in that particular winter it felt a little too close to reality. 

Everyone was scrambling for hardware. Hyperscalers were hoarding silicon like survivalists clearing out canned food aisles. Even seasoned operators were reduced to quietly asking one another, off the record of course, whether they “knew a guy.” 

Yet in the middle of all this scarcity, Nebius (NBIS) kept bringing new capacity online as if they had discovered a private GPU spring somewhere under the Alps.

This is the part of the Nebius story that doesn’t show up in the investor deck but tells you everything you need to know. 

Their most recent quarter, with revenue up more than threefold and EBITDA losses shrinking at a pace most companies only dream about, was not the result of accounting tricks or exuberant pricing. It was the payoff from years spent solving unglamorous infrastructure problems that most AI companies never think about. 

The market missed this, as it often does, and punished the stock anyway. Meanwhile, the people inside hyperscaler procurement circles simply nodded and went back to work.

Nebius didn’t stumble into its giant contracts with Microsoft (MSFT) and Meta (META). These agreements were earned through the slow and often frustrating grind of delivering physical infrastructure in a world where the bottlenecks are measured in megawatts, cooling density and transformer lead times. 

Anyone can talk about artificial intelligence. Very few can take a powered shell in Finland or an empty space in New Jersey and have it humming with Blackwell clusters in a matter of weeks. Nebius can. 

That’s why it has become one of the hyperscalers’ favorite suppliers. This is also why the market completely misread the Meta deal. 

Investors expected another headline number on par with the Microsoft agreement. They assumed that the size of the contract was a reflection of demand. 

In reality, it was a reflection of how much capacity Nebius could physically deploy at this moment. Meta wanted more. Microsoft wants more. Everyone wants more. 

The limiting factor isn’t customer appetite. It’s the speed at which Nebius can add power and floor space. In infrastructure, that’s the kind of problem you want to have.

Their capital spending, which now approaches $5 billion for the year, is simply the cost of playing at this level. Unlike the speculative overbuilding we saw in the early cloud era, Nebius is not erecting data centers and hoping customers show up later. Everything they are building already has a home. 

The company has more than $4 billion in cash, access to asset-backed financing and clients with credit ratings most banks would trade for in a heartbeat. This is not reckless expansion. It’s what I call contracted expansion.

The most striking part of the story is the guidance. $7 billion to $9 billion in annual recurring revenue by 2026 would sound fanciful if it were not already halfway spoken for. This isn’t a dream of what the future might look like. It’s a construction schedule that has already begun. 

Once the power is live and the racks are standing, the revenue follows with a kind of mechanical inevitability rare in high growth companies. Infrastructure has its own logic. It rewards those who build early and punishes those who wait.

That’s not to say this is risk free. Scaling to gigawatt levels will test every part of the organization. Power authorities have a habit of changing their minds at inconvenient times. Politicians like attention. Regulators like to feel useful. Competitors like to make life difficult. But Nebius has an edge many investors underestimate. 

They already have a track record of delivering under constraints that defeat most companies. Hyperscalers notice this. They don’t care about the stock price. They only care about who can deliver their GPUs on time and without drama.

And that brings us back to my friend’s joke about smuggling hardware in diplomatic bags. Much of the industry is still grumbling about shortages and bottlenecks and looking for someone to blame. 

Nebius, on the other hand, behaves like the one company that never had to worry about any of it. They simply keep turning on new capacity.

This is why the dip doesn’t bother me. After decades of watching technology cycles bend and twist, I’ve learned to pay attention to the companies that operate calmly while everyone else panics. 

When the industry is still trading stories about how impossible it is to get hardware, you want to own the firm that acts as if supply constraints are someone else’s problem.

Which is why, if GPUs ever do become contraband, Nebius is the only outfit I would trust to move them without smudging the packaging.