Nebius Group secured a significant five-year agreement with Microsoft Corp. to supply GPU-equipped infrastructure capacity, valued at up to $19.4 billion, leading to a substantial increase in Nebius shares in extended trading and highlighting growing demand for AI infrastructure.

U.S. equities saw a notable development in the technology sector as Nebius Group (NASDAQ:NBIS), an artificial intelligence (AI) infrastructure provider, announced a landmark agreement with Microsoft Corp. (NASDAQ:MSFT). This strategic partnership, which could be worth as much as $19.4 billion, propelled Nebius shares to significant gains, underscoring the intense demand for high-performance computing resources in the burgeoning AI landscape.

The Event in Detail

On September 9th, Nebius Group disclosed a five-year agreement with Microsoft for the provision of dedicated GPU cloud infrastructure. The core of the deal is valued at $17.4 billion, with a provision for Microsoft to acquire an additional $2 billion in services or capacity, potentially increasing the total value to $19.4 billion. This substantial commitment, extending through 2031, positions Nebius to supply critical computing power from its new, purpose-built data center in Vineland, New Jersey, with deployments slated to occur in tranches across 2025 and 2026.

Analysis of Market Reaction

The market reacted with significant bullishness to the announcement. Nebius shares experienced a substantial surge, climbing 49.42% to close at $95.72 on September 9th. This dramatic advance was accompanied by extraordinary trading volume, with over 88 million shares changing hands—nearly nine times the daily average—reflecting strong investor conviction. The scale of the agreement, with its base value of $17.4 billion, notably surpassed Nebius’s entire market capitalization of approximately $15.1 billion prior to the news, and significantly overshadows the company’s own ambitious full-year 2025 annualized run-rate guidance of $900 million to $1.1 billion. This single contract fundamentally reshapes Nebius’s financial trajectory by providing an exceptionally clear and stable revenue stream for nearly a decade.

For Microsoft, the agreement represents a strategic maneuver to secure essential AI computing resources amidst surging demand. By leasing GPU capacity from Nebius, Microsoft can expand its cloud services without incurring additional capital expenditures directly on its balance sheet, a move consistent with its Chief Financial Officer Amy Hood’s earlier indication of expected capacity constraints through the end of 2025.

Broader Context & Implications

The Nebius-Microsoft deal highlights several key trends in the technology sector. It underscores the soaring demand for high-performance compute power, particularly graphics processing units (GPUs), driven by the competitive landscape of generative AI. The arrangement also signals a broader shift in corporate finance strategies, favoring off-balance-sheet arrangements for large infrastructure projects.

Since returning to public markets on Nasdaq in October 2024, Nebius shares have gained an impressive 350%. While the announcement provided a tailwind for the broader AI infrastructure sector, the market reaction was highly specific to Nebius, with competitors like CoreWeave (NASDAQ:CRWV) seeing a more modest 7.1% gain on the same day. This indicates that investors view this as a transformative win for Nebius, solidifying its position as a critical new force in the global AI infrastructure landscape.

Expert Commentary

Analysts have begun to re-evaluate Nebius’s prospects in light of the agreement. Regarding the financial structure of the deal, D.A. Davidson analyst Gil Luria noted the emerging trend:

We believe the trend is clear — capex is out and off-balance-sheet arrangements with external debt are the way forward.

This perspective emphasizes the financial engineering employed to facilitate rapid infrastructure expansion in a capital-intensive industry.

Looking Ahead

To support the rapid expansion required to fulfill the Microsoft contract and capitalize on its newfound market position, Nebius has announced plans to raise significant capital. This includes a $1 billion public sale of its Class A shares and a $2 billion private placement of convertible senior notes. With $1.68 billion in cash on its balance sheet at the end of Q2, Nebius is undertaking these financing efforts from a position of strength, aiming to fund hyper-growth and secure its ambitious goal of over 1 GW of power by the end of 2026. Nebius founder and CEO Arkady Volozh expressed confidence in future growth, stating:

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.

The successful execution of the Vineland data center buildout and deployment of capacity for Microsoft will be key metrics for investors to monitor in the coming quarters, as Nebius aims to convert this landmark agreement into sustained market leadership in the AI cloud sector.