The race for artificial intelligence infrastructure just hit a new milestone. Dutch-based Nebius Group (NASDAQ: NBIS) has signed a $17.4 billion AI infrastructure deal with Microsoft (https://crystalpakistan.com/small-language-models-slms/NASDAQ: MSFT), sending its shares soaring by nearly 50% in a single trading session.
This multi-year partnership underscores the surging demand for GPU-powered data centers as companies scramble to secure the computing resources necessary to build, train, and scale AI models. With the contract potentially reaching $19.4 billion, the Nebius Microsoft AI deal is one of the largest in the history of AI infrastructure.
But who exactly is Nebius, why is Microsoft betting billions on its capacity, and what does this mean for investors and the broader AI market? Let’s break it down.
What Is Nebius?
Nebius Group is a Netherlands-based technology company specializing in GPU infrastructure, AI cloud services, and high-performance computing (HPC). Emerging from a split with Russian tech giant Yandex, Nebius has quickly positioned itself as a serious competitor in the AI cloud race.
The company provides:
- Nvidia GPU infrastructure for training and running AI models.
- AI cloud services including storage, managed services, and developer tools.
- Custom-built hardware optimized for enterprise-scale AI workloads.
Despite being relatively unknown to retail investors, Nebius has posted remarkable profit margins. According to S&P Global Market Intelligence, it generated $249 million in revenue in 2024—and an eye-popping $243.5 million in profit (a 97.7% net margin).
Now, with Microsoft’s multibillion-dollar deal, Nebius is scaling into one of the most important players in the global AI infrastructure market.
Inside the Nebius Microsoft AI Deal
The agreement between Microsoft and Nebius covers five years and involves Nebius providing dedicated GPU infrastructure capacity to Microsoft.
- Value: $17.4 billion guaranteed, with potential expansion to $19.4 billion.
- Location: A brand-new data center in Vineland, New Jersey, expected to come online in late 2025.
- Duration: Leasing in tranches starting 2025, expanding further in 2026, and running through at least 2031.
- Scope: Microsoft gains access to Nebius’ cutting-edge GPU clusters to meet skyrocketing AI demand.
Arkady Volozh, CEO of Nebius, called the deal both “economically attractive” and strategically vital, noting it will accelerate Nebius’ growth in the AI cloud market in 2026 and beyond.
Why Microsoft Needs Nebius
Microsoft is already one of the biggest backers of AI, with multi-billion-dollar investments in OpenAI and deep integration of AI features across Azure, Microsoft 365, and Copilot tools.
But as the AI race heats up, infrastructure has become a bottleneck. Training and deploying large AI models requires enormous GPU clusters—something Microsoft can’t secure alone.
- Microsoft is already the largest customer of CoreWeave, another AI data center firm.
- Demand for GPUs like Nvidia’s H100 and upcoming B100 chips continues to outpace supply.
- By partnering with Nebius, Microsoft secures additional long-term GPU capacity to support its growing AI ecosystem.
In short, Microsoft isn’t just investing in AI apps—it’s stockpiling the “fuel” (compute power) needed to stay ahead of rivals like Google, Amazon, and Meta.
Investor Reaction: Nebius Stock Soars
Following the announcement, Nebius stock (NBIS) skyrocketed:
- +47% after-hours on Sept 8 (Reuters).
- +40% in morning trading on Sept 9 (Yahoo Finance).
Investors clearly see the deal as transformational. A company that once generated just $249M in annual revenue is now set to manage contracts worth nearly 80 times that amount.The deal also highlights Nebius’ “picks and shovels” role in the AI boom—selling infrastructure rather than competing directly in AI applications. This approach mirrors the California Gold Rush strategy: those who sold the tools often made more money than the miners themselves.
The Bigger Picture: Data Centers as the New Gold Rush
Industry analysts (TheStreet, Reuters, Yahoo Finance) point out that AI infrastructure providers are the true winners in the current AI wave.
- Nebius joins a hot sector that includes CoreWeave, TeraWulf, Cipher Mining, and IREN—firms pivoting from crypto or cloud to AI infrastructure.
- These companies are securing strategic partnerships with Big Tech (Microsoft, Google, Amazon) to deliver the massive compute power AI requires.
- Demand is expected to accelerate into 2026 and beyond, with governments also fast-tracking permitting for AI data centers.
For investors, this signals a shift: the best way to play AI may not be apps like ChatGPT, but infrastructure providers like Nebius.
Risks for Nebius
While the Nebius Microsoft AI deal is a huge win, risks remain:
- Capital Expenditure – Nebius must invest heavily in building new data centers. This may require debt financing.
- Execution Risk – Delivering capacity on time and at scale is critical. Any delays could impact revenue.
- Competition – CoreWeave, Google-backed WULF, and other players are expanding aggressively.
- Dependence on Microsoft – While lucrative, the deal ties a large portion of Nebius’ revenue to a single client.
Still, if executed well, this contract could cement Nebius as a top-tier AI infrastructure leader.
Conclusion
The Nebius Microsoft AI deal marks one of the most significant milestones in the AI infrastructure industry. Worth up to $19.4 billion, the partnership not only secures Microsoft’s access to essential GPU capacity but also positions Nebius as a breakout player in the AI revolution.
With soaring demand for data centers, Nvidia-powered GPUs, and on-demand AI cloud services, Nebius could transform from a niche player into a global powerhouse. For investors, this deal highlights a bigger truth: the future of AI will be built not only by the companies designing models—but also by those powering the infrastructure behind them.
FAQs about the Nebius Microsoft AI Deal
Q1: How much is the Nebius Microsoft AI deal worth?
The deal is valued at $17.4 billion over five years, with additional capacity options that could bring the total to $19.4 billion.
Q2: What will Nebius provide Microsoft?
Nebius will supply dedicated GPU infrastructure capacity from its new Vineland, New Jersey data center, enabling Microsoft to run large-scale AI workloads.
Q3: When does the Nebius Microsoft deal start?
Leasing will begin in late 2025, expand in 2026, and continue through 2031.
Q5: Who are Nebius’ competitors?
Nebius competes with CoreWeave, TeraWulf, Cipher Mining, and IREN, all of which are expanding into AI cloud and GPU-based data centers.
