Nebius Group (NASDAQ: NBIS) experienced a dramatic turnaround on Friday, with shares plummeting 15% to close at $187.77. This drop nearly erased the week’s earlier gains, yet the stock still managed to finish with a 5.7% increase for the week, underscoring the volatility that often characterizes companies in the AI infrastructure sector.
The decline was triggered by a deeper analysis of an SEC filing related to Nvidia (NASDAQ: NVDA). Initially, the disclosure, which revealed Nvidia’s 9.3% beneficial ownership in Nebius, sparked optimism among investors. However, as the market digested the information, it became clear that this filing did not indicate new investments.
Instead, it disclosed that a substantial portion of Nvidia’s ownership consisted of pre-funded warrants acquired several months prior. As the realization set in, investor enthusiasm waned, leading many to lock in profits and triggering a sharp selloff before the weekend.
Warrants Cause Investor Confusion
The initial positive sentiment was fueled by assumptions that Nvidia had recently enhanced its stake in Nebius. Regulatory documents revealed, however, that approximately 94.6% of the disclosed position was linked to warrants purchased in March, rather than new stock purchases.
These warrants, which cannot be exercised until September and are subject to transfer restrictions, meant that the filing largely reflected existing ownership rather than representing a new investment endorsement. This shift in understanding significantly altered investor sentiment, as Friday’s $33.20 decline erased almost all of the $34.30 increase observed after the initial filing.
This downturn was not unique to Nebius; other AI infrastructure companies faced pressure as well, with CoreWeave (NASDAQ: CRWV) dropping 11.4% and IREN (NASDAQ: IREN) declining 8.7%. Such movements indicate a broader market caution rather than isolated issues within specific firms.
Trading activity also surged, with nearly 24 million shares changing hands during Friday’s session, representing about 34% above the stock’s recent average daily volume.
AI Investment Scrutiny Intensifies
Aside from the Nvidia filing, investors are increasingly scrutinizing the costs associated with building AI infrastructure. Rising capital expenditure commitments from major tech companies have sparked concerns regarding the timeline for these investments to yield profits.
Market sentiment weakened further as U.S. growth funds reported significant outflows this past week. Investors are now keenly awaiting earnings reports from major Nebius clients, Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META), to gain insights into future AI spending and trends.
Continued Expansion Despite Market Fluctuations
Despite the selloff on Friday, Nebius is actively expanding its AI infrastructure business. The company recently secured a $775 million senior financing facility, which is backed by deployed GPUs and contracted customer cash flows, providing necessary funding for ongoing growth initiatives.
Nebius reported over $40 billion in contracted revenue, with Microsoft and Meta among its key customers. In the first quarter, revenue skyrocketed by 684% year-over-year to reach $399 million, while adjusted EBITDA was reported at $129.5 million.
Looking ahead, Nebius has raised its capital expenditure forecast for 2026 to between $20 billion and $25 billion, reflecting a robust expansion strategy. Investors are expected to shift focus towards the execution of this strategy, customer demand, and the deployment of AI infrastructure, rather than solely on ownership filings.
