AI cloud startup Nebius Group (NBIS) jumped nearly 50% on Tuesday after announcing a massive deal to deliver dedicated GPU capacity to Microsoft (MSFT) at its new data center in New Jersey.
According to a filing by Nebius with the SEC, the agreement is worth $17.4 billion through 2031, with the potential for Microsoft to acquire additional services and/or capacity that could push the deal to $19.4 billion.
Nebius said in its filing that GPU services will be deployed in several tranches during 2025 and 2026.
Some of the cash flow it's getting from the contract with Microsoft will be used to finance the operation.
“Nebius’s core AI cloud business, serving customers from AI startups to enterprises, is performing exceptionally well,” Nebius founder and CEO Arkady Volozh said. “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.
Microsoft is the first of these contracts and Volozh said he believes “there are more to come.”
‘Nebius story is one of a kind’
Investors appear to agree that this is just the beginning of a period of substantial growth for the Amsterdam-based company.
NBIS shares have soared 240.5% for the year.
“With the Microsoft deal secured, Nebius is positioned to accelerate growth even further. Expansion will come faster, revenues and earnings will continue to climb, and the risk profile has dropped dramatically,” Christal Starcher, a client services associate at UBS’ BV Group, said in a post on X. “The company carries almost no debt, holds significant cash reserves, and is posting remarkable revenue growth.”
She noted that “its subsidiaries alone are valued in the billions,” which will provide it with significant funding strength. “The Nebius story is one of a kind,” she added.
Shay Boloor, who runs the popular Stocktwits platform, called Nebius’s deal with Microsoft “bigger than the whole company.” In fact, the company’s market cap is about $22.5 billion, making a potential $19.4 billion contract near what its valuation is today.
“GPU bottlenecks = leverage. This locks Nebius deeper into the AI supply chain right as scarcity defines pricing power,” Boloor said. “We’re still so early in AI.”
Mike Alfred, founder and managing partner of Alpine Fox, alluded to how the hyperscaler’s thirst for power provided by data centers will help fuel growth of companies like Nebius.
“I repeat: every single spare or idle megawatt will be employed for AI or Bitcoin,” he said. “Every single one. No exceptions.”
Nebius announced a partnership with another tech giant in May when it revealed that Jeff Bezos had become a lead investor in its AI data solutions business Toloka.
The investment is being made through Bezos Expedition, which is the investment arm of the Amazon founder.
As for its contract with Microsoft, Volozh said that while “the economics of the deal are attractive in their own right,” just as important is that it “will also help us to accelerate the growth of our AI cloud business even further in 2026 and beyond.”
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