Nebius Convertible Notes Proposal Draws Scrutiny

Nebius Group N.V. (NASDAQ: NBIS) announced on Aug. 19, 2026, a private offering of convertible senior notes, a financing move that could increase the company’s Class A share count amid rapid AI-cloud growth and heavy capital spending that have intensified investor scrutiny.

Convertible Notes Offering and Exchange Plan

Nebius proposed a private offering of convertible senior notes totaling $4.5 billion, split into $2.75 billion due 2030 and $1.75 billion due 2034. Initial purchasers are expected to receive options exercisable within 13 days to buy up to $375 million more of the 2030 notes and $300 million more of the 2034 notes, potentially raising the principal to $5.175 billion if fully exercised. The company said it intends to use the net proceeds to finance business growth, including data center construction, full-stack AI cloud development, data center expansion, procurement of key components such as GPUs, and general corporate purposes.

The offering is structured as a private Rule 144A placement to qualified institutional buyers and is subject to market and other conditions. The notes will be issued under indentures with U.S. Bank Trust Company, National Association, as trustee. Interest rates, conversion prices, and other economic terms will be set at pricing.

Simultaneously, Nebius expects to enter separate, privately negotiated exchange agreements with a limited number of holders of its 2.00% convertible senior notes due 2029 and 3.00% notes due 2031. These agreements will swap portions of those notes for Class A ordinary shares, reducing outstanding convertible principal while increasing share count and introducing dilution risk.

This financing effort follows heavy capital spending and prior equity raises. Nebius has partly funded its expansion through contract prepayments and an at-the-market equity program that generated about $2.8 billion from roughly 12.7 million Class A shares sold at a weighted average price of $224 per share.

Investor sentiment had already softened before the convertible plan emerged. Shares traded lower on Aug. 18 amid a broader retreat in AI-cloud stocks, driven by inflation concerns and rising bond yields, which heightened sensitivity to equity and convertible issuance.

Q2 Results and Outlook

For the quarter ended June 30, 2026, Nebius reported revenue of about $582 million, a 454.0% year-over-year increase and roughly 46.0% higher than the prior quarter. Annualized run-rate revenue reached $3.0 billion at quarter-end, up about 598.0% year-over-year and 56–58% sequentially from $1.9 billion at the end of March. The Nebius AI segment accounted for approximately $575 million, or 98% of group revenue, growing about 514.0% year-over-year.

Adjusted EBITDA rose to about $236 million, reversing a prior-year loss of $21 million and lifting the adjusted EBITDA margin to roughly 40–41%. The company reported a net loss of $0.12 per share for the quarter. Capital expenditures totaled about $5.7 billion, primarily for property, equipment, and intangibles tied to GPUs and data center expansion as part of its AI cloud capex program.

The quarter included four major AI cloud contracts, each valued at more than $1 billion. Management described these deals as having improved pricing, prepayment coverage, and paybacks under two years, enhancing earnings visibility for 2027 and 2028.

Management reaffirmed 2026 targets, expecting group revenue between $3.0 billion and $3.4 billion, an annualized run-rate revenue target of $7 billion to $9 billion, an adjusted EBITDA margin around 40%, and capital expenditures of $20 billion to $25 billion. The company also aims to secure 5 gigawatts of contracted power by year-end.

Nebius’s rapid revenue growth and margin improvement support a bullish execution case, but the size of the planned convertible offering and the exchange agreements have heightened investor focus on near-term dilution and funding risks, keeping sentiment mixed as the company scales its AI-cloud infrastructure.