Why did Nebius's stock plummet on Tuesday? What do top analysts recommend investors do?

Nebius is facing pressure today, with the stock price closing down approximately 10.4%. This decline appears to be primarily driven by concerns over dilution related to the company’s latest financing. Previously, the company announced plans to raise $3.75 billion through a convertible bond issuance, aimed at supporting the construction of its AI data center infrastructure.

Convertible bonds may ultimately convert to equity, which increases dilution risk and often impacts market sentiment in the short term. This timing adds another layer to the market response, as the financing follows a strong surge driven by Nebius’s newly announced multi-year agreement with Meta. After such a sharp rise, some investors seem to be stepping back to reassess valuations and the costs of financing for future growth.

Despite the pullback, D.A. Davidson analyst Alexander Platt, who ranks in the top 4% of Wall Street analysts, maintains a constructive outlook and views the agreement with Meta as an important validation of Nebius’s positioning in the AI infrastructure race.

Platt believes that the agreement “continues to validate Nebius as one of the leading cloud service providers, like CoreWeave,” reinforcing the view that the company is competing among a very niche and valuable group of providers.

Platt sees this agreement as a crucial step in building Nebius’s future revenue base while emphasizing that this opportunity goes beyond just this one client. The analyst adds that he still expects Nebius “to sign with another large hyperscale computing company within the next year,” indicating that confidence in strong demand for large-scale AI computing remains robust.

Looking further ahead, Platt notes that the company is preparing to secure more transactions of similar scale with its expanding infrastructure footprint and long-term capacity plans. In his view, Nebius is laying the groundwork to obtain another hyperscale computing partnership comparable to its existing contract size, although the financial contributions of these agreements will take time to reflect in reported results.

To that end, Platt gives NBIS stock a buy rating and raises his price target from $150 to $200, implying a potential upside of 73%.

Other Wall Street firms also seem to have a generally positive view of Nebius, with an analysis from eight analysts indicating a strong buy consensus rating for the stock. Among them, seven recommend buying, one maintains a hold, and none suggest selling. In terms of price targets, the average target price is $168.13, suggesting approximately 47% upside from current levels.

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Editor: Zhang Jun SF065