Key highlights:
- Nebius (NBIS) fell ~20% over two sessions as Gartner warned $3.5T+ in planned AI infrastructure spending could face impairment by 2030
- The selloff spread across AI infrastructure as CoreWeave -9.5% (bonds yielding above 15%), IREN -12.18%, Applied Digital -9.43%, and Oracle -8.8%
- Nebius faces additional scrutiny over its $4.5B convertible debt offering and insider share sales with results due Oct. 22
Nebius shares extended their decline on Thursday as concerns over rising borrowing costs, mounting debt across the AI infrastructure sector
It also comes as a warning about potential overcapacity and added pressure on companies investing billions of dollars in artificial intelligence.
NBIS stock, which had fallen 10.08% to close at $186.01 on Wednesday, continued to slide in premarket trading on Thursday, reaching $178.20 before dropping further during the session.
It had traded as high as $188 earlier in the day before falling to $176.30, down $12.11, or 6.43%, at the time of the reported price.
The broader decline has brought Nebius close to a 20% loss over the period, as investors reassess the financial risks behind the rapid expansion of AI computing infrastructure.
Gartner warns of $3.5 trillion AI infrastructure risk as Nebius faces scrutiny
The sell-off followed a warning from research firm Gartner that more than $3.5 trillion in planned AI infrastructure spending could face impairment by the end of 2030 if companies continue investing at their current pace.
Gartner estimates that AI providers will spend nearly $1 trillion on infrastructure in 2026, followed by another $6 trillion between 2027 and 2030.
However, the firm expects enterprise and consumer AI revenue attributable to data centers to reach no more than $3.6 trillion over the same period.
That leaves a substantial gap between the revenue the industry could generate and the amount required to support its investment plans.
According to Gartner analyst Will Sommer, AI data center owners would need to generate a cumulative $8.5 trillion in revenue through 2030 to cover announced capital expenditure, financing costs, and a 12% return on invested capital.
The projected revenue shortfall raises questions about whether infrastructure providers can earn sufficient returns before their expensive equipment becomes outdated.
Gartner also expects more than 80% of neocloud providers to cease independent operations by 2030 because of cost pressures and a lack of differentiated business models.
The prediction includes companies being acquired or merged, rather than necessarily going bankrupt.
Nebius operates in this market, providing cloud infrastructure designed for AI workloads. Its business depends on deploying computing capacity, including advanced graphics processing units, and attracting customers willing to pay for that capacity.
The company must therefore balance the cost of expanding its infrastructure against the revenue generated by its services.
CoreWeave, IREN, and Oracle tumble as AI infrastructure costs mount
The pressure has spread across the sector as CoreWeave shares dropped 9.5% on Wednesday, while IREN fell 12.18% to $30.56.
Applied Digital declined 9.43%, and Oracle lost 8.8% amid broader concerns about the cost of financing AI expansion.
CoreWeave also faced scrutiny after a batch of its bonds reportedly yielded above 15%, intensifying questions about borrowing costs for companies building AI data centers.
Chief executive Mike Intrator defended the company’s financial position in an internal memo, pointing to a $104 billion backlog that he said supported its debt obligations.
Higher interest rates have added another challenge as US inflation data showing a 3.7% year-over-year increase strengthened concerns that borrowing costs could remain elevated.
Treasury yields subsequently rose, increasing the pressure on companies that rely on debt to finance infrastructure projects.
Can Nebius turn its AI expansion into sustainable cash flow?
Nebius has also faced scrutiny over its own financing requirements and insider transactions.
The company previously announced a $4.5 billion convertible debt offering, while regulatory filings disclosed share sales by executives.
Some transactions were made under prearranged trading plans, limiting what they reveal about executives’ views of the current decline.
The immediate question for investors is whether Nebius can translate its expanding AI infrastructure into sustainable cash flow.
Demand for AI computing remains central to its business, but spending on data centers, chips, and financing must eventually be supported by customer revenue.
Gartner’s projections have intensified that debate, particularly for smaller infrastructure providers that lack the diversified income streams of major cloud companies.
Nebius is scheduled to report results on October 22, giving investors an opportunity to assess its revenue growth, deployed computing capacity, and funding requirements.