Nebius Group N.V. (NASDAQ:NBIS) saw its shares slide 5.66% to $259.66 in regular trading on Wednesday, marking its third session since joining the Nasdaq-100 index. The decline was roughly 13 times steeper than the Nasdaq-100's 0.43% drop, underscoring investor unease about the company's capital expenditure trajectory.
Market Reaction and Index Inclusion
The stock closed 13.4% below its 52-week high of June 22. Trading volume reached 15.1 million shares, about 86% of the 65-day average. However, after-hours activity saw a rebound of 5.14% to $273.00, recovering approximately 86% of the regular session losses. The rebound suggests that index-related passive flows are providing some support, as Nasdaq Inc. (NASDAQ:NDAQ) noted that over 200 products tracking the Nasdaq-100 hold more than $800 billion globally.
Capital Intensity Raises Concerns
Investors remain focused on Nebius's capital intensity. The company reported first-quarter revenue of $399.0 million, but capital expenditures on property, equipment, and intangible assets totaled $2.47 billion—approximately 6.2 times revenue. Operating costs and expenses reached $527.0 million, or 132% of revenue. As of March 31, Nebius held $9.30 billion in cash and equivalents, with non-current debt of $8.43 billion.
Nebius plans to raise "mid-single digits billions of dollars" through asset-backed and corporate debt financing in the near term. The company has not yet tapped its at-the-market equity program.
Product Update and Strategic Contracts
On Wednesday, Nebius announced AI Cloud 3.6, which introduces Nebius Echo, an agent for managing cloud infrastructure via natural language, along with customer-managed encryption keys and enhanced controls for sensitive workloads. Additionally, Komodor announced that Nebius selected its platform for Kubernetes troubleshooting in its hyperscale AI cloud. Nebius CTO Danila Shtan emphasized that uptime and performance are "mission-critical," and Komodor co-founder Itiel Shwartz noted that manual reliability work "becomes untenable" as AI workloads grow.
Revenue Growth and Future Outlook
Nebius reported Q1 group revenue growth of 684% year-over-year, with Nebius AI cloud revenue of $389.7 million, representing about 98% of group revenue. The annualized run-rate at March-end stood at $1.92 billion, up 54% from December. The company targets $3.0 billion to $3.4 billion in revenue for 2026 and an annualized run-rate of $7 billion to $9 billion.
A key strategic contract with Meta Platforms (NASDAQ:META) involves a five-year, $12 billion compute purchase set to commence in early 2027. Nebius also has a $15 billion contract allowing it to sell compute capacity to Meta at locked-in terms or to other AI cloud buyers at market prices. Other major customers include Microsoft (NASDAQ:MSFT), and Nvidia Corp. (NASDAQ:NVDA) invested $2 billion in the first quarter.
Capacity Expansion and Financing
Investors are monitoring how quickly contracted power converts to operational data center capacity. Nebius has contracted capacity above 3.5 GW and raised its year-end target past 4 GW, but it still guides for only 800 MW to 1 GW of connected power by year-end, covering fully equipped data centers.
The company is negotiating debt deals and expects to begin raising billions of dollars soon. The at-the-market program remains untapped.
