Nebius Investors Back the Blueprint, But the Market Still Wants Proof

Nebius Group's shares fell 31% from highs despite a $5.75B convertible raise and $40B order book, as dilution concerns weigh on AI infrastructure player.

The arithmetic of Nebius Group's ambition is hard to argue with. Five gigawatts of contracted power capacity by the end of 2026, a $40 billion order book, and a freshly upsized convertible bond that pulled in $5.75 billion. Yet the equity tells a different story: shares closed Friday at €180.72, down roughly 31% from a 52-week high of €261.00, and off about a quarter since second-quarter results landed two weeks ago.

That disconnect — between operational momentum and share-price reality — is the defining tension for anyone watching this AI infrastructure player right now.

A Funding Package That Grew in the Telling

The convertible offering, first announced at $4.5 billion, was expanded in stages before closing on August 24 at $5.75 billion. The structure splits into two tranches: $3.45 billion of notes carrying a 0.50% coupon maturing in 2030, and $2.3 billion at 4.50% due in 2034. On top of that, Nebius converted $800 million of existing convertible debt into 15.8 million Class A shares. Goldman Sachs and JPMorgan led the transaction, with Reuters attributing the heavy demand to broad appetite for AI cloud capacity.

The raise is the logical extension of a business model built on physical infrastructure. Serving a $40 billion order book requires power, land, and capital — in that sequence. A $775 million receivables-backed credit facility, disclosed alongside the convertible, underscores the point.

Shareholders Say Yes, Traders Say Wait

Tuesday's annual general meeting delivered unanimous approval of every resolution put to a vote. That came just days after the convertible closed, and the clean sweep signals shareholder endorsement of management's capital-intensive path — even as the stock has bled.

The market's hesitation isn't about weak operating data. Q2 revenue came in at $582.3 million, with management reaffirming full-year guidance of $3.0 to $3.4 billion in revenue and an annualized run-rate target of $7 to $9 billion. For 2026, Nebius expects $9 billion in total customer prepayments and pointed to four contracts each averaging over $1 billion in value. The power capacity target was also raised: from 3 gigawatts in February to 4 gigawatts in May, and now 5 gigawatts by year-end.

The concern is structural. Convertibles of this magnitude dilute future shareholders, and the $800 million debt-to-equity swap has already put additional shares into circulation. Investors are pricing in that dilution before the new data centers generate any revenue. The stock's 24.6% slide since earnings — and an 18.4% drop following Citigroup's price-target hike to $324 with a maintained Buy rating, published the same day as the Q2 numbers — fits that pattern.

A Regulatory Win Amid the Capital Overhang

One risk has been retired. The approval of the Vineland, New Jersey data center project prompted DA Davidson analyst Gil Luria to restore his price target to $250, a week after cutting it from that level to $175. The Neutral rating stayed put. That was mid-August, and the stock has drifted lower since — but the episode shows a central regulatory hurdle is cleared while the capital-markets overhang persists.

The 2026 guidance remains unchanged: revenue between $3.0 and $3.4 billion, an annualized run-rate of $7 to $9 billion, an adjusted EBITDA margin around 40%, and capital expenditures of $20 to $25 billion. The range is wide, and it highlights just how capital-hungry this business is. The combination of steady guidance and a growing order book points to growth dynamics rather than fundamental weakness — the risk sits in the financing structure, which demands ever more capital, not in the business model itself.

With 30-day volatility at 172% and an RSI of 47.1, the stock is neither overbought nor oversold — it's simply trading in an environment of extreme expectation swings. Friday's close of €180.72, down 3.6% on the day, suggests dilution concerns remain the dominant near-term force. Nebius now faces the task of converting its freshly raised capital into actual data center capacity and revenue growth, the only remedy that will quiet the skeptics.