Nebius stock falls as investors scrutinise software margins in light of $25 billion capital expenditure

NBIS was last down 11.7% at $165.87 at 10:48 a.m. Eastern on July 28, with shares moving between $161.69 and $183.23 on 10.3 million shares. CoreWeave fell 7.2%, while global chip stocks declined. Reuters reported Chinese rivals, concerns about AI investment, and high valuations as factors. Reuters Nebius’s filing on July 27 outlined a renewal of an existing 20% issuance authorization, potentially increasing dilution concerns. No public offering was detailed. SEC

No, dilution does not occur automatically. The proposal gives permission—but does not mandate—the issuance of new Class A shares. It applies to a maximum of 20% of outstanding capital and allows for pre-emptive rights to be set aside. The authorization is valid for five years and could facilitate either funding activities or acquisitions. SEC The same 20% authorization was approved by shareholders at the August 2025 meeting. Whether dilution takes place depends on if, how many, and at what price new shares are issued. SEC

No, this primarily involved an earlier deal becoming subject to reporting rules. The July filing mainly reflected a pre-funded warrant obtained in March. Nvidia disclosed 22.26 million beneficial shares, representing a 9.3% stake in Class A. Of these, roughly 21.07 million are tied to warrants, with just 1.19 million as direct ownership. SEC The warrant cannot be exercised, nor can shares be sold, prior to September 11. Nebius had previously received Nvidia’s $2.0 billion investment in the first quarter. SEC

On a GAAP basis, that is correct. Net income for Q1 reached $621.2 million, with an operating loss reported at $128.0 million. The bulk of profit came from a $780.6 million non-cash investment revaluation. Adjusted net loss totaled $100.3 million. Adjusted EBITDA moved into positive territory at $129.5 million. SEC The AI cloud segment delivered $174.0 million in adjusted EBITDA with a 45% margin. Nebius Assets

Management is aiming for revenue in the range of $3.0–$3.4 billion and year-end ARR of $7–$9 billion. SEC First quarter revenue totaled $399 million, with ARR at $1.92 billion as of March. Nebius Assets That leaves $2.60–$3.00 billion to be generated over the following quarters, or $867 million–$1.00 billion on a quarterly basis. Year-end ARR targets require an increase to about 3.6–4.7 times March levels. Nebius expects Q3 to show major capacity gains, with 800MW to 1GW slated for connection by year-end. Progress on sequential ARR growth and utilization will be key to tracking ramp-up. Nebius Assets

Nebius increased its 2026 capex outlook to $20–$25 billion. Reuters The company finished March with $9.30 billion in cash, while Q1 capital expenditures reached $2.47 billion. Total debt in March was about $8.45 billion, reflecting significant convertible-note holdings. SEC Its $775 million secured facility arranged in July carries SOFR plus 2.50%, backed by specific projects. Customer inflows combined with this facility fully cover the company’s GPU-related capex. Nebius Nebius’ May statement highlighted debt, received prepayments, and an unused ATM program as available sources. Substantial dilution remains a possibility. Nebius Assets

Meta has pledged to $12 billion in capacity through 2027, with an additional $15 billion contingent on unsold capacity and therefore not assured. Microsoft holds a separate $17.4 billion agreement. Reuters As of March 31, Nebius disclosed $33.59 billion in remaining performance obligations, of which only 29% is estimated to be recognized as revenue in the next 24 months. This figure contains projected variable consideration, meaning values could shift. Demand remains visible, though timing of delivery and major client concentration continue to be important factors. SEC

Possibly, though the business case is yet to be demonstrated. Hardware investment and ownership will fall to the partners, while Nebius contributes the software and markets the available capacity. The company describes the structure as demanding little additional capital, pursuing high-margin sales. Early-stage agreements have been reached, though no participating partners or financial details have been disclosed. Nebius Guidance for 2026 capital spending was left unchanged, maintaining the figure at $20–$25 billion. Investors seek information on available capacity, how revenue will be split, and when the service will go live. Reuters

On a straightforward price-to-sales basis, the answer is no. With 253.90 million shares as of March, a price of $165.87 gives an equity valuation of about $42.1 billion. That equates to approximately 12.4 to 14.0 times management’s projected 2026 revenue. This figure is a rough calculation, since the share count is from March. SEC Nvidia’s warrant could convert to 21.07 million shares. The $4.34 billion convertible notes from March convert at around $180–$183 per share, a premium to the current price. SEC While growth is outsize, the level of financing and execution risk remains elevated.

Meta and Microsoft are due to release earnings after markets close Wednesday, July 29. Their statements on AI investments and external capacity may trigger rapid moves in NBIS. Meta The Federal Reserve also meets Wednesday, with markets assigning a 36% probability to a quarter-point rate hike. Reuters Nebius has not announced a Q2 earnings date; there are no updates on its events calendar. The next confirmed event is the August 25 annual meeting. Nebius In the meantime, sector sentiment and customer feedback are likely to lead direction until an earnings date is set.