Why Nvidia-Backed Nebius Group Stock Got Crushed on Thursday
Key Points
Locals expressed concerns about the proposed expansion of the company's facility in N.J.
The public hearing turned contentious as residents raised issues including the impact on water use, power, and air quality.
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Nebius Group (NASDAQ: NBIS) stock turned sharply lower today, plunging as much as 10.5%. As of 2:32 p.m. ET, the stock was still down 10.1%.
The catalyst that sent the artificial intelligence (AI) and neocloud specialist lower was a contentious public hearing about the construction of one of its data centers.
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Public outcry
Nebius Group has partnered with DataOne to construct a massive AI data center in Vineland, N.J. The 300-megawatt facility, which will mark Nebius' first major data center in the U.S., is expected to be the size of 45 football fields and to be a flagship facility for the company. The first phase is nearing completion, and Nebius has applied to increase the size of the location several-fold.
However, a public hearing on Wednesday evening about a proposed expansion of the facility turned contentious as a packed house of city residents expressed concerns about a lack of transparency regarding the proceedings. Locals also questioned the impact of the data center on their quality of life, including issues related to water use, noise, and air quality. The meeting, originally scheduled to be held at City Hall, was moved to a local theater to accommodate the sizable crowd.
The city planning board has yet to reach a final decision regarding the expansion, but investors are now concerned that the pushback from the local community could throw a wrench in the works.
Just last month, Nvidia announced it owned a nearly 10% stake in Nebius. The neocloud operator builds data centers and supplies the necessary infrastructure -- including Nvidia graphics processing units (GPUs) -- that provide users with access to high-performance computing and enable AI, often referred to as GPU-as-a-service (GPUaaS).
There's been a growing outcry against the construction of data centers, as residents have expressed concerns about the electricity and water resources needed to power these facilities.
Since no decision has been issued regarding the fate of the expansion, today's sell-off is a bit premature, in my opinion. That said, the situation bears watching.
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Danny Vena, CPA has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
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