What Nebius CEO Just Said Shows How Quickly the Fed Can Kill the AI Boom

Nebius's CEO warned that the AI buildout depends on cheap financing, highlighting how a rise in borrowing costs could quickly erode margins and the economics of large multi-year contracts. Q1 results showed strong AI Cloud growth (841% YoY) and a 45% adjusted EBITDA margin, but revenue missed estimates and the business is capital-intensive (Q1 capex $2.47B vs. operating cash flow $2.26B). Management has raised billions via convertible notes and plans large power and data-center buildouts, making targets (2026 ARR $7–9B, ~40% adj. EBITDA) sensitive to Fed policy. The piece flags broader market risk for rate-sensitive AI names (including NVIDIA and Palantir) if rates stop falling or rise, implying negative implications for valuations and capex-driven growth.