Nebius Group's Over-Allotment Exercise: A Signal of Market Confidence and Strategic Momentum

Nebius Group's recent full exercise of its underwriters' over-allotment option—granting the purchase of an additional 1,621,621 Class A shares at $92.50 per share—has injected $1.15 billion into its coffers, bringing total proceeds from its public offering and convertible notes to $4.3 billionNebius Group announces exercise of the underwriters' option to purchase additional Class A shares^[1]. This move, coupled with a 5.5% single-day stock price surge to $99.31 in mid-September 2025Nebius Group (NASDAQ:NBIS) Trading Up 5.5% - Here's Why^[2], underscores a pivotal moment for the AI infrastructure giant. Investors and analysts are now scrutinizing how this capital infusion and market reaction reflect broader confidence in Nebius's growth narrative.

Market Confidence: A Greenshoe Signal

The over-allotment option, or greenshoe, is a critical tool for stabilizing post-IPO volatility. By exercising this option, underwriters signal robust demand for Nebius's shares, reducing downward pressure on the stock price. According to a report by Bloomberg, the full exercise of the greenshoe is often interpreted as a vote of confidence in a company's fundamentalsNebius Stock To $450?^[3]. For Nebius, this aligns with its recent $17.4 billion GPU infrastructure contract with Microsoft, which validates its vertically integrated AI hardware capabilities and secures multi-year revenue visibilityNebius Group announces pricing of upsized private offering of $2.75 billion of convertible senior notes^[4].

The timing of the exercise—just weeks after closing a $2.75 billion convertible notes offering—further highlights strategic momentum. The company's decision to raise capital across both equity and debt instruments suggests a deliberate effort to fund aggressive expansion, including data center acquisitions and compute hardware procurementNebius Group announces closings of its public offering of Class A ordinary shares and concurrent private offering of convertible senior notes with aggregate gross proceeds to date of approximately $4.2 billion^[5]. This dual-pronged approach has been praised by analysts at Morgan Stanley, who note that Nebius's ability to secure such large-scale financing at favorable terms reflects investor appetite for high-growth AI infrastructure playsNebius Group: A Strategic Entry Point for Investors? - Nasdaq^[6].

Stock Performance: Volatility and Optimism

Nebius's stock has surged 350% since its IPO, with a market capitalization exceeding $21 billion as of September 2025Nebius Group N.V. Sees Strong Market Position as New Ventures …^[7]. While the recent $99.31 peak represents a 36% increase in trading volume, it also reflects mixed signals. On one hand, the Microsoft deal and strong capital raises have driven bullish sentiment, with price targets from analysts reaching as high as $130Nebius Group's Options: A Look at What the Big Money is Thinking^[8]. On the other, options trading activity reveals hedging by institutional investors, with bearish positions suggesting caution about execution risksUnraveling the Mystery: What Nebius Group’s Options Activity …^[9].

The greenshoe exercise itself may mitigate short-term volatility. By allowing underwriters to stabilize the stock price through additional share purchases, the move reduces dilution pressures and reinforces investor trust. As stated by a Reuters analyst, “The greenshoe's full exercise is a rare win for both the company and its underwriters, signaling alignment between management and market participants”Stock Reevaluation: Mixed Signals as NBIS Faces Market …^[10].

Strategic Implications: Funding the AI Infrastructure Boom

Nebius's use of proceeds—targeting data center expansion, hardware acquisitions, and strategic partnerships—positions it to capitalize on the AI-driven cloud computing boom. The $17.4 billion Microsoft contract, in particular, is a cornerstone of its growth story, with revenue projections rising from $117 million in 2024 to $1.5 billion in 2026Nebius Group Announces Pricing of Upsized Private Offering of $2.75 Billion of Convertible Senior Notes^[11]. This trajectory has attracted institutional buyers, with the company reaffirming its $750 million to $1 billion annual recurring revenue (ARR) target for December 2025Nebius Group Announces Exercise of the Underwriters' Option to Purchase Additional Class A Shares^[12].

However, the aggressive capital raise also raises questions about leverage. While Nebius maintains manageable debt levels, the effective conversion premiums on its convertible notes—68% for 2029 and 75% for 2031—highlight potential dilution risks if the stock continues to outperform expectationsNebius Group announces proposed private offering of $2 billion of convertible senior notes^[13].

Conclusion: A High-Stakes Bet on AI's Future

Nebius's over-allotment exercise and broader fundraising efforts reflect a company in motion, leveraging market confidence to fuel its AI infrastructure ambitions. The greenshoe's full exercise and the Microsoft deal have solidified its position as a key player in the sector, but investors must weigh the risks of rapid expansion against the rewards of a $459-per-share 2030 valuation scenarioWhy Is Nebius Stock Soaring Thursday? - Nebius Group …^[14]. For now, the stock's trajectory suggests that Nebius has struck a chord with a market hungry for scalable AI solutions—and the greenshoe is just one more sign that the party is far from over.