Known as a major hyperscaler, Meta Platforms (META 1.46%) is one of several large tech companies that are essentially funding the infrastructure needed to power the deployment of artificial intelligence (AI). One way the hyperscalers are doing this is by building data centers or purchasing computing capacity in centers designed to run AI applications.

Recently, Meta just provided incredible news to one AI data center stock.

A large five-year deal

Recently, an AI data center company called Nebius Group (NBIS +2.56%) announced that it had just inked a five-year contract with Meta to provide capacity across several of its data centers for the “Magnificent Seven” tech giant.

Per the agreement, Nebius will provide $12 billion in capacity at its data centers, which will feature Nvidia‘s next-generation graphics processing units (GPUs) and platform, called Vera Rubin. Meta will also purchase added computing capacity worth up to $15 billion in other Nebius data centers that will open over the next five years.

Nebius plans to sell this capacity to third-party cloud customers, but Meta will buy the remaining capacity. The contract between Nebius and Meta has a total value of up to $27 billion. The former builds data centers equipped with Nvidia’s latest platforms and GPUs, then rents them to companies looking to deploy AI. Many of these customers have been hyperscalers.

Nebius and Meta had already announced a first agreement at the end of 2025 to provide $3 billion of capacity over a five-year period. So this second deal, which is occurring only about four months after the first, is a good sign for the relationship between the two.

The deal will significantly expand Nebius’ revenue

The new Meta deal has the potential to be bigger than an earlier agreement Nebius signed with Microsoft, which has the potential to be worth $19.4 billion over five years.

Therefore, the Meta deal should significantly increase Nebius’ medium-term revenue guidance. In 2025, Nvidia exited the year with an annual recurring revenue (ARR) run rate of $1.2 billion. Actual revenue in 2025 was about $530 million. In 2026, Nebius’ management has guided for actual revenue between $3 billion and $3.4 billion, while achieving an ARR run rate between $7 billion and $9 billion.

The deal with Meta is not slated to kick in until 2027, but even with the initial five-year $12 billion deal, that would add $2.4 billion to annual revenue, assuming it’s spread out evenly, which should allow it to conservatively hit an ARR rate surpassing $10 billion in 2027.

According to Visible Alpha estimates, analysts expect Nebius to have total revenue of about $9 billion in 2027 and $14 billion in 2028. With the Meta deal, these estimates now seem very beatable.

Nebius Group

Today’s Change

(2.56%) $3.04

Current Price

$121.60

Trading at a roughly $33 billion market cap as of this writing, Nebius is not expensive if you value it on revenue. It’s expected to take the company much longer to achieve profitability, but it did achieve positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2025. Investors should be somewhat suspect of adjusted EBITDA because companies can essentially make whatever adjustments they want.

For instance, in 2025, the bulk of the adjustments came from stock-based compensation and depreciation and amortization, a big point of contention in data centers and GPUs because there’s debate over the useful lives of GPUs and other AI hardware.

I don’t think it’s a bad idea to have some exposure to data centers to gain potential AI upside, and I like Nebius not only for its data center network but also because the company owns other AI businesses. However, I still believe buying data center stocks is speculative right now, especially because many, like Nebius, have already seen their stock prices surge in a short period, so I see no need to make it a large investment.