Nebius Stock Soars 50% on $17.4B Microsoft AI Infrastructure Deal
The five-year agreement for GPU capacity could expand to $19.4 billion, marking Nebius's first major hyperscaler contract.
Shares of AI infrastructure firm Nebius Group (NBIS) surged over 50% after the company announced a landmark five-year deal with Microsoft valued at up to $19.4 billion. The agreement will see Nebius provide Microsoft with dedicated GPU infrastructure from a new data center in New Jersey, addressing the intense demand for high-performance computing driven by the global AI boom.
The contract, with a baseline value of , marks a pivotal moment for Nebius, a spin-off from Yandex. This is its first major contract with a hyperscale technology company, catapulting it into a critical role as a global infrastructure partner. For Microsoft, the partnership helps alleviate a significant capacity crunch as demand for its AI services, including Azure AI and its work with OpenAI, continues to outpace its infrastructure growth. Microsoft CFO Amy Hood recently noted the company expects to be for the remainder of the year.
The deal triggered a flurry of positive reactions from Wall Street. BWS Financial raised its price target on Nebius to $130 from $90, maintaining a Buy rating. Analysts noted the Microsoft deal will consume nearly the entire capacity of Nebius’s New Jersey facility and could attract other hyperscalers as the company expands. Similarly, and a $77 price target, viewing the agreement as a major catalyst for Nebius's GPU-as-a-Service offering.
Backed by investors like Nvidia and Accel Partners, Nebius specializes in GPU-driven infrastructure designed for training and deploying advanced machine learning models. The Microsoft contract not only provides a substantial revenue stream but also validates Nebius's focused strategy in the competitive AI landscape. As part of the deal, Nebius plans to accelerate its expansion, aiming to develop 1 gigawatt of capacity in the coming years to meet the insatiable demand for AI computing power.