Nebius Just Raised $5 Billion in Convertible Notes Against a $1.4 Billion Revenue Base. Are We In a Bubble?

Key Points Nebius priced $5.0 billion of convertible senior notes on Wednesday, upsized from a proposed $4.5 billion. The notes convert at $313.46 and $324.65 per share, premiums of about 40% and 45% over Wednesday's close. Nebius's second-quarter capital spending was about $5.7 billion, nearly 10 times its revenue. 10 stocks we like better than Nebius Group › Nebius Group (NASDAQ:NBIS) announced a proposed $4.5 billion convertible note offering on Wednesday, and shares of the artificial intelligence (AI) cloud company fell about 10% on the news. By that evening, the deal had been upsized and priced. Nebius sold $5.0 billion of convertible senior notes, expected to settle on Aug. 24, with net proceeds of about $4.94 billion. For scale, Nebius has generated $1.36 billion of revenue over the past 12 months. The company just borrowed more than three and a half times that in a single transaction. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » The size (and a share exchange that came along with it) helps explain Wednesday's drop. The terms are worth attention too, because they spell out what building at Nebius's pace costs, and who pays. But the bigger question here may be this: With financing this big relative to revenue this small, are we in a bubble? Image source: Getty Images. The coupons aren't the cost The offering comes in two pieces. There is $3 billion of notes due 2030 that pay 0.50% interest, convertible into stock at an initial price of $313.46 per share, a premium of about 40% over Wednesday's closing price of $223.90. And there is $2 billion of notes due 2034 paying 4.50%, convertible at $324.65 (a 45% premium). The buyers also hold an option for up to $750 million more, which could push net proceeds toward $5.68 billion. Those coupons look cheap, and on their own they are. But they are not all Nebius pays. Both series accrete, meaning the principal owed grows over the life of the notes. At maturity, the company repays 110% of the original principal on the 2030 notes and 125% on the 2034s -- an extra $300 million and $500 million on top of the interest. Add both coupons up, and the cash interest comes to about $105 million a year. The accretion adds roughly $153 million more on average, bringing the real cost to near $258 million a year -- about 19% of trailing revenue, not the 8% the coupons alone suggest. That works out to roughly 3.3% per year on the 2030 notes and 7.5% on the 2034 notes. If the notes convert, holders could receive about 15.7 million new Class A shares at the initial conversion prices -- close to 6% dilution against the 271.9 million shares outstanding at the end of June, though only if the stock has climbed 40% or more. And even then, Nebius can settle in cash, shares, or a mix. And some dilution arrives right away. Alongside the new notes, Nebius agreed to exchange $400 million each of its existing 2029 and 2031 convertible notes for about 15.8 million Class A shares, settling the same day. The swap retires old debt but hands a similar number of new shares to noteholders now. Where the $5 billion goes Nebius says the proceeds will fund data center construction and the build-out of its AI cloud platform . The biggest line item is components -- graphics processing units (GPUs) above all. The spending this supports is enormous relative to the company. Nebius reported second-quarter revenue of $582.3 million, up 454% year over year. Its capital expenditures in the same quarter were about $5.7 billion, nearly 10 times its revenue. At that pace, this week's raise covers roughly a quarter's worth of building. The company is spending like that because customers keep signing. Annualized run-rate revenue for its AI cloud business reached $3.0 billion at the end of June -- 56% higher than just three months earlier. Nebius closed four deals in the quarter with total contract values averaging more than $1 billion. And it expects more than $9 billion in customer prepayments in 2026. So the funding stack keeps growing. Nebius ended the quarter holding $8 billion in cash, raised $775 million of secured debt in July, and has $5 billion more arriving when the notes settle. Management is assembling money from every source at once because of what it has promised to build: The company expects to end 2026 with 5 gigawatts of contracted power, a target it has raised repeatedly from just over 1 gigawatt a year ago -- capacity that has to be built before most of it earns anything. Profitable, with an asterisk Nebius produced $236.2 million of adjusted EBITDA in the second quarter. However, depreciation and amortization ran $259.7 million -- larger than the adjusted profit. GPUs wear out and lose value quickly. So whether the growth stays profitable once the full cost of the hardware flows through the income statement matters more, I'd argue, than any single quarter's revenue figure. Then there's the stock's price: about $220 as of this writing, down from $248.43 just before the offering was proposed. That values the company near $60 billion, about 44 times its trailing revenue and about 20 times the annualized run rate. That's pricey. Investors selling this week were likely reacting to the strategy's visible costs. But the less visible cost is that a company spending $5.7 billion a quarter will likely need to raise again, on whatever terms the market offers next time. The deal itself was well executed, I think. The conversion prices are high, the maturities are long, and the money is committed before it's needed. But the coupons flatter what this costs (and this risks). Nebius is buying its growth in advance, and the revenue that pays for it hasn't arrived yet. With all of this said, none of this confirms we're in a bubble. But it certainly confirms there is some exuberance in this market -- and that's certainly one symptom of a bubble. Should you buy stock in Nebius Group right now? Before you buy stock in Nebius Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nebius Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $429,223 !* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,318,055 !* Now, it’s worth noting Stock Advisor’s total average return is 965 % — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor , and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 22, 2026. Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

Nebius priced $5.0 billion of convertible senior notes on Wednesday, upsized from a proposed $4.5 billion.

The notes convert at $313.46 and $324.65 per share, premiums of about 40% and 45% over Wednesday's close.

Nebius's second-quarter capital spending was about $5.7 billion, nearly 10 times its revenue.

Nebius Group (NASDAQ:NBIS) announced a proposed $4.5 billion convertible note offering on Wednesday, and shares of the artificial intelligence (AI) cloud company fell about 10% on the news. By that evening, the deal had been upsized and priced. Nebius sold $5.0 billion of convertible senior notes, expected to settle on Aug. 24, with net proceeds of about $4.94 billion.

For scale, Nebius has generated $1.36 billion of revenue over the past 12 months. The company just borrowed more than three and a half times that in a single transaction.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

The size (and a share exchange that came along with it) helps explain Wednesday's drop. The terms are worth attention too, because they spell out what building at Nebius's pace costs, and who pays.