re: Nebius - NBIS - AI Infrastructure Company

If anyone has any desire to understand what Nebius hopes to do, then I would encourage you to memorize this post and know all that there is to know about it.
One can build conviction from a post like this.
Everything else is noise.

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Although not worried, I think this is the type of day where the stock price can rebound at the end of the day - after the market overreacts to breaking news and people have fomo before the markets close for the day.

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Seeing a conversion price of 175-200 will calm all fears.

The NBIS/IREN rivalry continues to be a lot of fun...

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If anyone is the next hyperscaler, it’s $IREN.

Remember, real hyperscalers are actually profitable…

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You mean I've been invested in the wrong company all this time???

So I probably do not have the time to do this justice fully but just some initial thoughts. I say this as an investor in both NBIS and IREN - but for this purpose I would focus on IREN.

First - if we are going to compare (and they are different companies going at this with different angles), I think it relevant to look at cost of capital or specifically cost of debt. Lenders tend to be a little more sophisticated when looking that these things (in that no one is day trading debt). Based off the last convertible offerings (NBIS 9/25 and IREN 10/25) - IREN clearly has the lower cost of debt, even when factoring in the capped call cost as interest expense. NBIS stated interest rate is higher, their debt includes a sneaky 15% principal accretion (IREN does not), and the Iren capped calls provide no dilution coverage to 100% vs NBIS 50%.

I will revisit when this when the new NBIS terms are announced but the fall wave was a clear W for IREN in terms of cost of capital. I do not think that was just them being lucky or a better negotiator - there was a conclusion of a lower credit risk.

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But we have to know, why does it seem that IREN is always the third choice (at best) when landing contracts.
They're always boasting power and land, power and land, but if it's uninhabited and unconnected, what good does that do?

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Yes they boast about power and land. But I do believe power is one of the ultimate bottlenecks so having secured a pipeline of 4.5 GW is fairly significant. I would rather have it than not.

I am not sure where the uninhabited and unconnected - what has NBIS connected if we are using that yard stick? 170MW currently correct? But obviously they have contracts and plans for more.

IREN has been in the game for literally less than a year and project IREN $3.7 billion projected ARR by the end of 2026 on less than 10% of their contracted power. That is not a bad first year in the game lol. They signed the MSFT deal (with 1.0 billion up front) and agreements to deploy 150,000 GPUs in their Cdn sites- again in year 1. They have upped the GPU count and target three separate times in the past six months - not sure why this is suggestive of an issue.

They do not have sitting and empty capacity. Sure we can argue maybe they should flip the bitcoin miner locations quicker if we think year one revenue of $3.7 billion is not sufficient *shrug*. GPUs in Canada leased before deployed; Childress leased to MSFT before deployed. 1GW about to be powered up in Sweetwater for Q2. If they do not get a deal on that in the next several months then I will get the point.

I guess I should ask what are you expecting them to do be to worthy that they have not? What is uninhabited or unpowered (or do you equally look at NBIS as a 170 MW shop)? Folks drooled over the NBIS ramp over the past few years - compare that to likely Iren AI ramp - both spectacular.

Again I think they are both going to be winners. They both have been huge winners over the last year.

Shockingly, to me, you are correct about the cost of capital.

Regarding land and power, I’m merely saying that NBIS is able to get deals without having the likes of a Childress or a Sweetwater in place.

Question being, how and why?
Early access to NVDA GPUs?

no, it's a great question. I do think part of it is nbis offers a more complete suite of services with the software layer. That is why I'm confident nbis will always get more per megawatt - and it may very well pull deals forward.

But we gotta keep in mind until 9 months ago IREN was considered a bitcoin miner. It is so early to pass judgment, positively or negatively on their turn rate. To me the type of deal they get for Sweetwater, which is sort of a crown jewel given the massive wattage will tell the story.


Also, I may fall for the charming Australian accent - but I have listened to a lot of of the CEOs interviews even going back a few years and I'm pretty darn confident in the guy.. another bias he's a former PWC auditor and us former auditors think a lot alike

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Also, I may fall for the charming Australian accent - but I have listened to a lot of of the CEOs interviews even going back a few years and I'm pretty darn confident in the guy.. another bias he's a former PWC auditor and us former auditors think a lot alike

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I understand. I have a huge man crush on Marc Boroditsky

Possibly a bit of early info:

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