Shares of Nebius Group (NBIS), a leading AI infrastructure company, tumbled 7.24% in pre-market trading on Monday following the company's announcement of a $1 billion private placement of convertible notes. The significant drop reflects investors' concerns about potential share dilution and the company's financial strategy.

According to the announcement made early Monday, Nebius plans to issue the convertible notes in two tranches: $500 million of 2.00% notes due 2029 and another $500 million of 3.00% notes due 2031. The company intends to use the proceeds to support its growth initiatives, including acquiring additional compute power and expanding its data center footprint.

While the fundraising aims to fuel Nebius's expansion in the competitive AI infrastructure market, the market's immediate reaction suggests that investors are wary of the potential dilutive effect of the convertible notes on existing shareholders. Despite the negative short-term impact, some analysts argue that this move could strengthen Nebius's long-term position in the rapidly evolving AI sector. As the market digests this news, investors will be closely watching how Nebius utilizes these funds to drive growth and maintain its competitive edge.