Sector-Wide Jitters Trigger Sharp Sell-Off in Nebius Shares

Nebius shares fell sharply despite strong earnings, as a report on CoreWeave's financing sparked fears across the AI infrastructure sector.

A wave of selling pressure across the artificial intelligence infrastructure sector slammed Nebius stock on Friday, February 20, sending shares down 9% to close at $97.92. This abrupt reversal came just days after the company's stock had rallied more than 20% on the back of robust quarterly earnings, highlighting the market's current hypersensitivity to financing concerns within the high-growth sector.

Strong Fundamentals Overshadowed by Broader Fears

The catalyst for the sector-wide decline was a report concerning CoreWeave, a key player in the AI cloud space. Lenders, including Blue Owl Capital, reportedly declined to provide debt financing for a data center project where CoreWeave was to be the anchor tenant, citing concerns over the company's creditworthiness. This news, coupled with a "Hold" rating initiation on CoreWeave by Morgan Stanley the same day, sparked a sell-off that quickly spread to peers like Nebius.

This downturn stands in stark contrast to the company's recent performance. On February 12, Nebius released fourth-quarter results that significantly exceeded expectations:

• Group Revenue for Q4 hit $227.7 million, a staggering 547% increase year-over-year.
• Annual Recurring Revenue (ARR) for the core AI Cloud business reached $1.2 billion by year-end, surpassing the high end of prior guidance.
• Core Cloud Revenue surged 830% compared to the previous year.
• The Adjusted EBITDA Margin for the Core Cloud segment improved to 24%, up from 19% in the third quarter.
• The company ended the period with a cash position of $3.7 billion, bolstered by $834 million in operating cash flow generated in Q4.

Management reaffirmed its ambitious target of achieving an annualized run-rate revenue between $7 billion and $9 billion by the end of 2026. For the full fiscal year 2026, revenue is projected to land between $3.0 billion and $3.4 billion.

Aggressive Expansion Plans and Balance Sheet Scrutiny

To support this growth, Nebius has outlined massive capital expenditure plans for 2026, estimated between $16 billion and $20 billion. The company announced nine new data center locations across the United States, France, Israel, and the United Kingdom. Its total contracted power capacity has been raised to over 3 gigawatts, up from previous plans of 2.5 gigawatts.

During the earnings call, CFO Ofir Naveh emphasized that Nebius carries "no corporate debt" and has "no asset-backed financings," clarifying this statement refers to traditional bank loans and secured lending instruments. It does not, however, include the company's outstanding convertible notes.

The balance sheet as of December 31, 2025, shows long-term liabilities of $4,103.2 million and short-term debt of $24.5 million. These primarily stem from two convertible bond issuances in 2025: $1 billion in June and $2.75 billion in September. Against a cash hoard of $3.7 billion, this results in a net debt position of approximately $450 million.

The company plans to fund roughly 60% of its 2026 capital expenditure needs from operational cash flow. The remaining portion is expected to be covered through additional financing sources, which may include potential corporate bonds, asset-backed financing, and an as-yet-untapped equity program.

Major Client Contracts Progressing as Scheduled

On the commercial front, key hyperscaler agreements are moving forward. The contract with Meta was fully delivered in early February, with a full twelve months of revenue from this initial tranche anticipated in the first year of 2026. Meanwhile, the first delivery under the multi-year Microsoft agreement—reported to be worth $17 billion—was completed on schedule in November. Subsequent tranches under this deal are slated for delivery throughout 2026.

The Takeaway: Solid Business Meets Sector Skepticism

The sharp pullback in Nebius shares underscores the AI infrastructure sector's acute vulnerability to broader financing anxieties. While CoreWeave's specific issues do not directly impact Nebius, credit-related concerns are casting a shadow over the entire industry. Although Nebius maintains a solid liquidity position with $3.7 billion in cash, it also carries $4.1 billion in convertible debt. The coming quarters will be critical in determining whether the company can convert its formidable operational momentum into its targeted revenue goals, especially while navigating its substantial planned investments for 2026.