Nebius Shares Soar on US$17.4 Billion Microsoft AI Deal

Nebius Group (NASDAQ:NBIS) surged on Tuesday (September 9) after announcing a multibillion-dollar deal with Microsoft (NASDAQ:MSFT) to provide dedicated artificial intelligence (AI) infrastructure.

Valued at US$17.4 billion over five years and expandable to US$19.4 billion if demand increases, the arrangement will see Nebius supply Microsoft with computing capacity from a new data center under construction in Vineland, New Jersey.

The news sent Nebius shares up 43.3 percent to US$91.75, their highest level on record.

For Nebius, a spinout from Russian tech giant Yandex that has grown into a full-stack AI infrastructure provider, the agreement represents a milestone in its long-term expansion strategy.

“Nebius’s core AI cloud business, serving customers from AI startups to enterprises, is performing exceptionally well,” said Arkady Volozh, the company's founder and CEO, in a statement. “We have also said that, in addition to our core business, we expect to secure significant long-term committed contracts with leading AI labs and big tech companies. I’m happy to announce the first of these contracts, and I believe there are more to come."

Microsoft’s mounting need for external infrastructure comes as it outpaces its in-house capacity amid a broader surge in demand for generative AI services. The company, already a key backer of OpenAI, has struck similar agreements with CoreWeave (NASDAQ:CRWV) to secure high-performance computing resources.

By turning to firms like Nebius, Microsoft is looking to bridge shortages of the advanced graphics processing units (GPUs) needed to run large AI models. The company's Vineland facility, part of a wave of new greenfield projects, will provide the dedicated GPU clusters that Microsoft requires to scale its AI services. The arrangement will allow Microsoft to lock in additional computing power, while providing Nebius with long-term revenue visibility.

Beyond its cloud business, Nebius also operates or invests in related ventures, including autonomous driving technology developer Avride, edtech platform TripleTen and database company ClickHouse.

As mentioned, the scale of Nebius' Microsoft contract has immediately reshaped investor sentiment. Nebius shares, which have already more than doubled this year, gained nearly half their value in a single session.

The rally spilled over to CoreWeave, which has its own multibillion-dollar contract with Microsoft and OpenAI.

Analysts suggest that the Microsoft deal positions Nebius to attract additional marquee customers, including other hyperscalers and frontier AI labs, as the company ramps up its global footprint.

Currently, there are expectations that the company, once considered a niche spinoff, could become one of the central players in supplying infrastructure for the AI boom.

Deliveries to Microsoft are expected to begin later this year.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.