Both Nebius and CoreWeave, two AI computing rental firms backed by Nvidia, released their second-quarter earnings reports around August 12, each exceeding market expectations.
More notably, management from both companies independently highlighted a shared trend during earnings calls: the price of AI computing rental is hitting new highs, with a particularly pronounced premium on short-term contracts. This price surge is primarily driven by a persistent shortage of computing capacity that can be delivered immediately.
Nebius CEO Arkady Volozh noted during the earnings call that the company held its first computing capacity auction in the second quarter, where Nvidia's Blackwell chips fetched prices "15% higher than the highest price we have ever charged." Meanwhile, CoreWeave announced a direct 25% price increase in July, with CFO Nitin Agrawal attributing it to "the current demand environment." Following the news, Nebius shares surged by as much as 34% on Wednesday, while CoreWeave rose 19%.
Nebius: First Auction Yields Record-High Prices
Nebius reported total second-quarter revenue of $582 million, a 454% year-over-year increase, slightly surpassing consensus estimates. Adjusted EBITDA reached $236.2 million, with a margin of 40.6%, exceeding the market's expectation of around 30% by over 800 basis points and showing substantial sequential improvement. The AI cloud business, generating $575 million in revenue, accounted for 99% of total revenue, with annualized recurring revenue (ARR) hitting $3 billion by the end of the quarter.
On pricing, CEO Arkady Volozh revealed a key detail during the earnings call: the company's first computing capacity auction in Q2 saw Blackwell chips sold at prices 15% higher than its historical peak. According to Nebius employee and insider Dylan, who shared insights on social media based on public earnings materials, the auction price for Blackwell chips was not only 15% above the historical high but also roughly 20% higher than existing pipeline prices.
A Morgan Stanley research report provided further pricing data:
Short-term contracts (3 to 6 months) have an ACV/MW (annualized contract value per megawatt) exceeding $40 million.
Q2 regular contracts show an ACV/MW above $20 million, a significant increase from the 2026 baseline of about $12 million.
Prices for older-generation GPUs rose more than 30% from Q1.
The company secured four "milestone" large deals, each averaging over $1 billion, with clients including Reflection, Cohere, a U.S. AI emerging lab, and a major U.S. quantitative fund. The total contract value (TCV) from new signings in Q2 grew approximately fourfold quarter-over-quarter, while TCV from new customers surged over ninefold.
Nebius employee Dylan explained the underlying logic with a formula on social media: "Our story can be understood through an equation: price per megawatt × activated megawatts × revenue conversion speed × financing efficiency + software leverage. In Q2, every component of this equation moved in a positive direction."
CoreWeave: July Sees 25% Overall Price Hike, Next-Gen Chips Set New Pricing Records
CoreWeave also sent strong pricing signals. CEO Michael Intrator told analysts during the earnings call that pricing and margins for Blackwell and subsequent Vera Rubin chips are "reaching all-time highs," while prices for previous-generation chips remain at or above levels from several years ago. CFO Nitin Agrawal then announced that the company raised prices by 25% in July, citing "responding to the current demand environment."
CoreWeave reported second-quarter revenue of $2.575 billion, a 158% year-over-year increase. Morgan Stanley raised its full-year revenue forecast from $12.537 billion to $12.957 billion, along with an upward revision of operating profit projections. Management expressed clear optimism about the pricing trend, with Agrawal stating, "We are more confident than ever in the long-term return on investment of our products."
Short-Term Contract Premiums: Pricing Logic Driven by Supply-Demand Mismatch
Why are short-term contracts priced higher?
Analogous to hotel pricing, where last-minute bookings cost more than those made six months in advance, the computing market follows the same logic. Clients requiring "immediately available" computing capacity must pay a premium for scarcity. Arkady Volozh described these clients as those with "immediate, time-sensitive needs." In contrast, clients signing multi-year long-term contracts do not pay the same premium, as data center supply is expected to expand over the coming years—by 2029, supply is likely greater, diluting demand premiums over time.
This explains why both companies are actively shifting toward short-term contracts, which lock in higher returns in the current environment. Morgan Stanley analyst Nick Del Deo noted in a Tuesday research report, "Pricing issues have recently garnered significant market attention." BNP Paribas also pointed out in an August 12 report that the pricing economics of Nebius's recent short-term contracts are "roughly comparable to those of SpaceX's recent contracts." SpaceX previously set a precedent for high-premium short-term contracts by renting out short-term computing capacity to Anthropic and Google.
Scale Expansion Continues, But Cash Burn Persists
Despite high prices, both companies are undergoing massive expansion, leading to elevated capital expenditures. For Nebius, a Morgan Stanley research report shows Q2 capital expenditures of approximately $5.657 billion, with a full-year estimate of $23.41 billion. The company has raised its 2026 contracted capacity target from over 4 GW to 5 GW and plans to deploy over 1 GW of new capacity annually starting in 2027.
Nebius employee Dylan acknowledged this challenge: "Q2 capex was about $5.7 billion. Converting GW into production computing power requires massive capital and near-perfect execution. The breakthrough isn't that the business suddenly becomes asset-light, but that more construction is supported by contracts, prepayments, and is financeable." About 70% of Nebius's Q2 contracts included client prepayments, and the four landmark deals (averaging over $1 billion each) had prepayments covering 50-60% of related capital expenditures. The payback period has shortened from a historical 2-3 years to about 1 year and 10 months.
Similarly, CoreWeave faces a similar situation. Morgan Stanley data indicates that CoreWeave's FY2026 free cash flow is expected to be -$30.286 billion, with debt projected to expand to around $38 billion by the end of 2026. Both companies remain in a loss-making state, but investors are currently unconcerned.
Capacity Expansion: Nebius Targets 5 GW, CoreWeave Accelerates Buildout
Both companies are accelerating capacity expansion. Nebius has raised its 2026 contracted capacity target from over 4 GW to 5 GW and plans to deploy over 1 GW of new capacity annually starting in 2027. Management stated that this will enable the company to achieve over 5 GW of active computing capacity by 2030. Arkady Volozh said during the earnings call, "We plan to accelerate the pace of bringing capacity to market—we intend to deploy over 1 GW annually from 2027."
For CoreWeave, active computing capacity reached 1,500 MW by the end of the second quarter, with Morgan Stanley expecting it to reach 2,000 MW by year-end and further expand to 3,150 MW by the end of 2027.
Wall Street's Applause and a Cautionary Note
The market reacted enthusiastically to both companies, but The Information author Martin Peers offered a sobering reminder: "The significance of high computing prices is easy to overinterpret. What's happening now is simply that it's hard to find the computing power you need at the moment." He noted that the high premiums are concentrated in short-term contracts, while the cloud computing industry is spending hundreds of billions of dollars to expand capacity, which will eventually balance supply and demand in the long run.
Morgan Stanley maintains an "equal-weight" rating on Nebius with a price target of $251.22, noting that while recent pricing data is encouraging, its material impact on 2026 revenue is limited—these short-term contracts will only come online later this year, and management indicated they will "clearly affect revenue in 2027 and beyond."
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