Nebius's stock falls as investors get a wake-up call on the cost of competing in AI

By Hannah Pedone

The neocloud company has new deals with major tech companies, and just announced that it will be taking on debt to help finance data centers

Shares of Nebius were down 10% on Tuesday after the company announced a bond offering.

Shares of Nebius Group slid on Tuesday as investors got a reality check on the costs of the company's AI-infrastructure buildout.

The stock fell 10.4% on Tuesday after the neocloud company announced a $3.75 billion bond offering to fund its data-center expansion plans. Nebius (NBIS) is planning two private offerings of convertible senior notes due in 2031 and 2033.

The shares were giving back some of their strong gains seen in the wake of the company's recent artificial-intelligence deals.

Nebius's stock surged 15% on Monday after it announced a $27 billion, five-year deal to supply Meta Platforms (META) with AI infrastructure, and it's up 25% so far this month when also factoring in a major rally fueled by a recently announced partnership with Nvidia (NVDA). The chip maker will invest $2 billion in Nebius as they work together to deploy AI infrastructure.

Read more: Nebius's stock soars after Nvidia investment. Here's what to know.

"There are a lot more new investors in the stock, and I don't think they're ready for the capital requirements that Nebius is talking about," BWS Financial analyst Hamed Khorsand told MarketWatch in an interview.

That said, he argued that the debt offering shouldn't be a surprise.

"Nebius mentioned their need for capital during their last earnings call and they said they would look for avenues that are not too restraining on the stock," Khorsand noted. "I took that to mean that they were going to be opportunistic."

The Meta deal offers a big growth opportunity, he added, but Nebius needs to spend money to unlock it.

Khorsand also pointed out that Nebius still doesn't have "a tremendous amount of debt" the way rival neocloud provider CoreWeave (CRWV) does.

Nebius said in a Tuesday press release that it intends to use the proceeds from the bond offering to finance the construction of data centers, develop its full-stack AI cloud and procure more graphics processing units.

Nebius CEO Arkady Volozh said in a Monday press release that the Meta deal is part of the company's effort to secure "more large, long-term capacity contracts" to grow its AI-cloud business. "We will continue to deliver," he added.

See also: Why Nvidia's stock is shrugging off a $1 trillion revenue forecast

-Hannah Pedone

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03-17-26 1829ET