Nebius Group (NBIS 3.65%) surprised investors with a big business deal, sending its stock soaring by nearly 50% on Tuesday. As of Thursday afternoon trading, Nebius shares were up by 40% for the week, according to data provided by S&P Global Market Intelligence.
The huge deal with tech giant Microsoft was worth more than Nebius' entire market cap at the time of the announcement. Nebius provides advanced cloud computing services used for artificial intelligence (AI) workloads.
Its graphics processing unit (GPU)-as-a-Service, known as neocloud, provides cost-efficient solutions typically for smaller-scale users that don't need the capacity of broad-service hyperscalers like Microsoft. Investors were thus shocked when a large cloud provider like Microsoft signed up for a big deal with Nebius.
Image source: Nebius Group.
Does Nebius have more big deals in the works?
The five-year deal is worth up to $19.4 billion. Nebius' market cap was about $15 billion before the announcement. Nebius stock soared, but it may continue to rise. Nebius founder and CEO Arkady Volozh stated:
We expect to secure significant long-term committed contracts with leading AI labs and big tech companies. I'm happy to announce the first of these contracts, and I believe there are more to come.
A smart time to raise capital
Nebius is also taking advantage of the moment by announcing a capital raise. It will raise about $1 billion from a public share offering priced at $92.50 per share. Additionally, it is issuing convertible notes to raise another $2.7 billion.
That helps explain the stock's pullback from this week's peak. Yet, the convertible bonds carry attractive interest rates for the company. The initial conversion price of about $138.75 per share represents a 50% premium over the public share offering price.
Other shareholders may simply be locking in profits after the meteoric rise in the share price earlier in the week. If management is accurate with its prediction of more deals to come, though, Nebius stock could soon regain new highs.
