Nebius lands $17.4B GPU infrastructure deal with Microsoft, shares surge 47% — TFN

Amsterdam-based AI infrastructure agency Nebius Group has agreed to supply Microsoft with a GPU infrastructure functionality from a brand new information centre in Vineland, New Jersey. The deal is valued at $17.4 billion over a five-year interval. With non-obligatory expansions, the entire contract may attain $19.4 billion by 2031.

The announcement despatched Nebius shares hovering greater than 47% after hours Monday, earlier than surging 50% in early Tuesday to $95.80.

A number of months again, Nebius secured $1 billion by a non-public placement of convertible notes. The providing contains two senior unsecured tranches: $500 million in 2.00% convertible notes maturing in 2029 and $500 million in 3.00% convertible notes due in 2031.

Addressing a worldwide capability crunch

The deal highlights the important scarcity of high-performance computing as demand for AI continues to speed up worldwide. Microsoft has invested file sums in new infrastructure, but its executives acknowledge that the corporate stays capacity-constrained and unable to fulfill its personal rising wants. The brand new partnership ensures a devoted pipeline of GPU assets at a time when even hyperscale suppliers wrestle to maintain up.

Nebius’ specialised providing

At its core, Nebius offers GPU infrastructure constructed on Nvidia chips, alongside cloud software program structure and in-house {hardware} designed for demanding workloads. Prospects use its providers to coach, fine-tune, and run machine studying fashions at scale, supported by managed instruments and storage. Whereas rivals like CoreWeave already serve Microsoft, Nebius’ entry marks a broadening of the tech big’s provider base.

The infrastructure rollout is scheduled to start later this yr in Vineland, with a number of deployment phases deliberate over a two-year interval.

Nebius traces its origins again to the worldwide operations of Yandex, the Russian web firm. Spun out as an unbiased enterprise in 2023, Nebius has since rebranded as a neocloud supplier, focusing squarely on GPU-driven infrastructure designed for coaching and deploying superior machine studying fashions. Its positioning as a specialist supplier permits it to compete with broader cloud giants by concentrating on essentially the most resource-intensive workloads.

Why did Microsoft flip to Nebius?

Microsoft already maintains a considerable settlement with CoreWeave, one other GPU infrastructure specialist backed by Nvidia. The addition of Nebius alerts Redmond’s technique to diversify provide strains as competitors in synthetic intelligence accelerates. Securing assured entry to GPU capability is now a important precedence for hyperscale firms, and Nebius’ providing offers Microsoft with each capability and geographic diversification.

Traders behind the expansion

Nebius counts Nvidia and Accel Companions amongst its backers, strengthening its ties to the {hardware} and enterprise ecosystems driving AI infrastructure. Till just lately, the corporate focused on supplying startups and mid-sized companies with reasonably priced entry to computing energy. The Microsoft contract represents a step-change in scale, positioning Nebius as a important provider to one of many world’s most respected firms.

Wanting ahead

For Nebius, the Microsoft contract not solely offers substantial assured income but in addition validates its deal with purpose-built GPU infrastructure. With demand exhibiting no indicators of slowing, the corporate’s transition from a Yandex spinoff to a worldwide infrastructure companion alerts a brand new chapter.

For Microsoft, securing Nebius’ capability affords respiratory room in a race the place each teraflop issues. As competitors intensifies, each firms stand to profit, Nebius by accelerated development and Microsoft by important provide safety.