$NBIS · The Motley Fool · 2026-11-04

But, uh yeah, the the moves right now, for example, a Nebus, right? Everybody's talking about Texas. Oh, >> but but Nebus doesn't even have any any data center plans for for Texas and and let it's down.

Nibbius is down. uh you're taking some shots here in the comments um that I'll just throw up here for you. Uh no better than the spaxs of five years ago. Uh these these neoclouds.

I think Nebus will will be here for the foreseeable future. But a Nebus for example, I don't think I've seen spaxs grow the way that they are growing. I don't think I've seen spaxs execute. I some Yes.

Um Nebus ARR for this year is expected to be $3 billion. It's next year I think 8 billion or so like exit one is is 8 billion probably going to be way higher. uh exit rate AR R4 for 27.

This is because the business is a real business. It's growing.

I I also think that if you look at the margins of the business and their report next week, I think a week from now or next Thursday morning, I think their report with the high GPU prices, with their their auction service, with the fact that they're not sold out of capacity, so they can benefit from raising prices of GPUs.

I think that could push the company also in a league of their own in that specific sector of this whole AI trade.

But yeah, companies that do need an insane amount of debt, that are not moving as fast as they can, that don't have the capacity to benefit from high GPU prices and super high demand right now.

They probably will will struggle because they'll need capital. And as we know the capital markets are closed or asking for for quite a lot to get to get money and that's going to create issues for certain players.

I think tomorrow IN reports but IN is the smallest player so it's a bit it's a bit irrelevant here but but Nebus is a Nebus and Kore probably next week is is very interesting

And with Nebu specifically, I I only talk about Nebus because it is my biggest NeoCloud player position. It's a company that has done something big in the past. They build up Yandex, which was I think a $30 billion company, Russian company, the the Google of Russia they called it.

So they have experience building these types of things before, especially in the AI data center type of of space. So they aren't they aren't coming from the crypto industry. They weren't Bitcoin miners before. That that makes a big difference.

uh Nibbius specifically and I've gotten you know you like to comment on my tweets about this but uh their challenge is they have issued mostly convertible debt which means that that coupon cost is kind of irrelevant is because you add the the option cost to the stock and if you have the option cost of the stock on top of that you could say well my borrowing cost is only 2%.

Well, that's not the true cost because you've added on this cost with that is the potential future dilution. The problem is that the stock has now fallen below most of those strike prices.

So now at the end of that term, and I don't I don't remember what the first date is, maybe 2030, maybe 2029, uh then you start to have to come up with the several billions of dollars, not just well, we get diluted.

You know, if the stock was $400 a share, you'd just be like, man, it's not even really debt. It's just dilution. We've already effectively sold that stock for a a higher price. So, that's the real challenge.

Um, and don't think the the challenge in this space if you if you are not familiar and haven't followed by the story I was go with is Sun Edison. Same exact business model just in the solar industry except the contracts instead of being a couple of years, the contracts were 20 years.

As soon as the capital markets closed to them, they were toast. um and they ended up going bankrupt. And that can happen because you have a mismatch between your revenue and your debt and your cost of capital and what you're actually generating in a return.

And we are still in a phase with these business models that you can sort of say, hey, you know what? This has a really low payback for the thing that we're building right now, but is that going to be true in six months?

Is it going to be true in a year? There's a lot of things that change, you know, and as soon as that capital cost goes above what your actual return is, you're in a downward spiral.

And that's what I worry about with these companies. That's why I uh that's that's why I am just cautious about I I have not invested in any of these NEOClouds. I'm not going to touch them because it's just not a it's not a bet. I've seen that bet go wrong.

mostly also because I do think Nebus will give us some color of 2027 maybe core reef as well. So we could get a a clearer picture of of what they're seeing for prepayments how they're going to meet their capex requirement who pays for it how do they pay for it.