Nebius Group N.V. shares experienced a sharp decline in Nasdaq trading on Tuesday, pressured by a major new artificial intelligence cloud venture from Google and Blackstone, alongside a downgrade from D.A. Davidson. The stock fell 7.5% to $184.84, while the broader Nasdaq-100 tracker, the Invesco QQQ Trust, slipped about 1.2%. Shares touched an intraday low of $183.42 after opening at $191.25.
The decline highlights growing competition in the AI infrastructure space, where Nebius has been a key player among so-called neoclouds—companies that rent AI computing capacity to developers and large tech clients. The sector has thrived on the premise that demand for chips, data-center power, and AI servers outpaces supply. However, that narrative now faces a new challenge.
Google and Blackstone announced plans to launch a U.S.-based AI cloud company, with Blackstone committing an initial $5 billion in equity. The venture aims to bring 500 megawatts of data-center capacity online by 2027, offering Google’s custom Tensor Processing Units (TPUs) under a compute-as-a-service model. This move directly targets the same market segment that Nebius and peers like CoreWeave serve.
CoreWeave, another listed AI cloud infrastructure provider, also fell sharply, dropping 7.8% to $95.66, indicating a broader reassessment of the AI compute trade rather than company-specific issues.
Adding to the pressure, D.A. Davidson downgraded Nebius to Neutral from Buy, while maintaining a $250 price target. Analyst Gil Luria noted the firm was “taking a breather” after the stock more than doubled this year, according to a Wall Street Journal report. Luria acknowledged that Nebius had “deservedly become a staple of the AI trade.”
Despite the selloff, Nebius reported impressive growth last week. First-quarter revenue reached $399.0 million, a 684% increase from $50.9 million a year earlier. Adjusted EBITDA came in at $129.5 million. The company also disclosed it had secured up to 1.2 gigawatts of power and land for a new owned AI factory in Pennsylvania.
However, the company’s expansion comes with hefty capital expenditures. Nebius raised its 2026 capex forecast to between $20 billion and $25 billion, up from a prior range of $16 billion to $20 billion. First-quarter capex rose to approximately $2.5 billion from $544 million a year earlier. Management argues that demand remains the primary constraint, not customer appetite. CEO Arkady Volozh told Reuters, “We typically see several customers competing for every GPU we bring online.”
Nebius has been leveraging large customers and partners to finance its buildout. Volozh noted in a shareholder letter that contracted capacity already exceeds 3.5 gigawatts, with expectations of more than 4 gigawatts by year-end. He also cited a second large agreement with Meta worth up to $27 billion and a $2 billion investment from Nvidia.
The risk for Nebius is that the story leaves little room for slippage. Delays in power connections, data-center construction, or chip deliveries could leave the company carrying heavy costs before revenue catches up. Additionally, if Google’s TPU-backed venture gains traction, the market may assign a lower value to Nvidia-focused cloud capacity. Tuesday’s selloff appears less a challenge to AI demand and more a check on valuation, as Nebius must defend a premium price that assumes flawless execution in a capital-intensive market.
