Morgan Stanley Model Shows Hyperscaler Compute Capacity Nearly Quadrupling by 2028, Undercutting Bear Case Against Nebius

AnalystIndustry Impact 4
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Summary · why it matters

Morgan Stanley projects that total compute capacity across the five major hyperscalers will climb from 30.5 gigawatts in 2025 to 116.6 gigawatts by 2028, a nearly fourfold increase requiring an estimated $4 trillion to $8 trillion in capital spending. The bottom-up model challenges the bear narrative that AI infrastructure faces oversupply, which had contributed to a 35% sell-off in Nebius Group stock. Nebius posted 684% year-over-year revenue growth and targets a $7 billion to $9 billion annualized revenue run rate by year-end, with a long-term goal of $51 billion by 2030. The company also announced a new asset-light partnership model where third-party data center owners finance facilities while Nebius supplies its AI cloud platform and earns recurring fees, removing much of the capital burden for expansion. The analysis suggests the market's earlier fears of excess compute capacity were misplaced, and the sell-off may represent an opportunity for patient investors.

Impact on stocks 9

Artificial Intelligence▲ · 7 stocks
Nebius Group N.V.
NBIS
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Morgan Stanley model challenges oversupply bear case, and Nebius announced asset-light partnership model reducing capital burden.

Cloud & Digital Infrastructure▲ · 1 stocks
Financials▲ · 1 stocks

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