Fuel for Growth or Red Flag: What Does a $4 Billion Debt Offering Really Mean for Nebius Stock?

Nebius Group (NBIS) has just announced a $4 billion convertible notes offering, clearly feeling the heat of the capital-intensive nature of AI infrastructure. The notes were offered to private investors, with the details to be decided at the time of pricing. As a result of this development, Nebius will now be able to raise cash at favorable interest rates while giving its investors the possibility to convert the investment into potential equity.

The company intends to use the proceeds to expand its existing AI cloud and data center business. This expansion is a direct result of deals that the firm has signed with hyperscalers and other strategic partners. For Nebius investors, the promising part is that Nebius is raising this money to cater to the demand for its products. However, there is also the risk of shareholding dilution if these notes are eventually converted to equity.

About Nebius Stock

Nebius Group is based in Amsterdam and serves global customers with its AI infrastructure offerings. It offers AI cloud and infrastructure as its core business model but also taps into robotics and autonomy. It can be considered as a full-stack AI ecosystem play rather than just another AI company.

NBIS stock has returned 335% over the past year, but the stock still hasn’t touched the all-time highs of October last year. During the same period, the iShares Semiconductor ETF (SOXX) has returned over 65%, so Nebius has proved to be a great outperformer for those betting on AI.

Not too long ago, NBIS was just a $5 to $6 billion company. Strategic partnerships like the $2 billion investment from Nvidia (NVDA) and an initial $3 billion AI deal with Meta (META) have now resulted in valuations that are difficult to justify, especially when the company isn’t yet profitable. On March 16, the company also reported a $27 billion infrastructure deal with Meta, so any hopes of getting a fair valuation have vanished in the short term anyway.

A price-to-sales ratio of 55.56x and an EV/sales ratio of 57.84 show that investors are paying a high price for how the company has performed in the last year. On a forward basis, though, these multiples shrink significantly. However, an increased risk of execution in a relatively new technological domain like AI is still there, and the whole reason the stock looks cheap on a forward estimates basis could be that not many investors want to take on that execution risk.

This will only change once the firm can streamline its operations and deliver meaningful earnings. For now, the weight of capex will drag the stock down, and the convertible notes are doing exactly that.

Nebius Announces Expansion of AI Infrastructure

Nebius announced its Q4 2025 earnings on Feb 12. It reported an EPS of $-0.69, which was well below Wall Street expectations of $-0.44. Similarly, the revenue of $227.7 million fell below expectations of $251 million. 

By the end of 2026, management expects to achieve an ARR of $8 billion at the midpoint. Revenue for the ongoing year is expected to be around $3.2 billion. About $16 to $20 billion will go into AI investments and other capital expenditures. However, roughly 60% of this amount is expected to be funded from the company’s cash flows, which is a positive sign for investors.

The earnings outlook for 2027 is a bright spot. NBIS is expected to grow its profits by 99.59% in 2027. Considering how fast things are changing, it might be worth keeping an eye on these NBIS earnings estimates because they’ll develop as further AI investments materialize.

What Are Analysts Saying About NBIS Stock?

Analysts have just turned bullish on NBIS stock with three different ratings on March 17. Citi initiated coverage of the stock with a target price of $169, while DA Davidson raised their price target from $150 to $200. Most importantly, Northland Securities reiterated its “Buy” stance and a price target of $232, which also happens to be the highest price target on Wall Street!

Taken together with the other ratings from Street analysts, NBIS has a consensus “Strong Buy” with an average price target of $168.89.