Nebius Stock (NBIS) Falls on Plans to Raise $3.75B Convertible Loan after Meta Platforms Deal

Nebius NBIS -11.54% ▼ stock was down about 11% on Tuesday at the time of writing after the AI infrastructure company announced that it intends to offer $3.75 billion in convertible senior notes in a private offering to institutional buyers. The neocloud company said that it intends to use the proceeds from this offering to finance its growth, including expenditures associated with the build-out of data centers and procurement of key components like GPUs.

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The company’s loan offering follows the announcement of a $27 billion deal to provide AI computing power to social media platform Meta Platforms META -0.29% ▼ and a $2 billion investment from chip giant Nvidia NVDA -0.62% ▼ . Separately, on Tuesday, Nebius announced a partnership with CrowdStrike CRWD +2.27% ▲ to integrate the cybersecurity company’s Falcon platform with Nebius AI Cloud infrastructure.

Nebius Plans Convertible Loan Offering to Support Growth Plans

Nebius intends to offer its $3.75 billion of convertible senior notes in two series: $2.0 billion in convertible notes due 2031 and $1.75 billion in convertible notes due 2033.

Moreover, the company expects to grant the initial purchaser a 13-day overallotment option to buy up to $300 million of 2031 notes and $262 million of 2033 notes.

Neocloud companies like Nebius and CoreWeave (CWRV) are relying on debt markets to invest in their infrastructure and meet surging cloud computing demand amid the AI boom. However, high debt levels of these companies have raised fears of an AI bubble.

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Wall Street’s Take on Nebius-Meta Deal

Nebius stock rallied 15% on Monday after announcing its deal with Meta Platforms. In reaction to the news, D.A. Davidson analyst Alexander Platt increased his price target for Nebius stock to $200 from $150 and reiterated a Buy rating. The 5-star analyst noted that the $27 billion contract is on top of the previous $3 billion contract between the two companies, which they announced last year.

Platt added that the new agreement continues to “validate” Nebius as one of the leading neocloud companies, alongside CoreWeave. The analyst still expects Nebius to sign another large hyperscaler customer over the next year.

Likewise, BWS Financial analyst Hamed Khorsand raised his price target for Nebius stock to $200 from $130 and reaffirmed a Buy rating. Khorsand noted that the company secured one of the largest contracts awarded by Meta Platforms less than six months after the initial contract was announced. He added that since the first contract with Meta was signed, NBIS has grown its infrastructure to 170 megawatts of activity capacity by the end of 2025 and about 2 gigawatts of contracted power.

The 5-star analyst raised his price target as he believes that the new contract with Meta presents the opportunity for further growth in 2027. “NBIS now seems poised to execute on its growth initiatives to reach its annualized recurring revenue (“ARR”) target of $7 billion to $9 billion by the end of 2026,” said Khorsand.

Is Nebius a Good Stock to Buy?

Currently, Wall Street has a Strong Buy consensus rating on Nebius stock based on seven Buys and one Hold recommendation. The average NBIS stock price target of $168.13 indicates 45% upside potential from current levels.

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