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Microsoft has signed a deal worth up to $20bn with the artificial intelligence infrastructure group Nebius to supply computing power for the tech giant’s AI operations over five years.
It is the latest major deal for an AI cloud computing provider — a small group of companies known as “neoclouds” — as tech companies spend hundreds of billions of dollars to build the infrastructure needed to run their powerful AI models.
Nebius’s shares soared as much as 68 per cent to $108 in after-hours trading following the announcement. The $15bn company was formed last year by splitting off the overseas operations of Yandex, Russia’s biggest internet group.
Rival CoreWeave’s shares rose more than 5 per cent as the deal signalled continued demand for AI infrastructure.
Under the deal, Microsoft will lease computing power from Nebius’s stock of graphics processing units (GPUs) — the high-performance chips on which AI models are run — at its new data centre in Vineland, New Jersey.
Nebius said the contract was worth $17.4bn over the next five years, but that it could expand to $19.4bn if Microsoft increases its compute demands.
Microsoft did not immediately respond to a request for comment.
Nebius said it would finance the construction of its data centre and buy the necessary chips with cash flow from the deal as well as by raising debt secured against the contract.
GPUs have become a lucrative asset class in the past two years since the launch of OpenAI’s ChatGPT kick-started a wave of investment in AI infrastructure.
Neocloud groups have raised billions of dollars of debt against their stash of chips. CoreWeave, which went public in March and is now worth about $45bn, has borrowed more than $12bn using its GPUs and services contracts with tech companies as collateral for the loans.
Microsoft signed contracts with CoreWeave worth as much as $10bn last year, but later chose not to exercise an option for a further $12bn of data centre capacity, the Financial Times has reported. CoreWeave subsequently signed contracts to supply computing power to OpenAI worth roughly $12bn.
Microsoft in July said its annual capital expenditure on AI would reach $120bn, up from $88bn the previous year and almost quadruple the $32bn in 2023.
Amsterdam-based Nebius is racing to build out new data centres for clients including French AI group Mistral. Its biggest data centre is in Finland but it has signalled it would expand in the US, where it said demand from customers is stronger than in Europe.
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Arkady Volozh, founder and chief executive of Nebius, said: “The economics of the deal are attractive in their own right, but, significantly, the deal will also help us to accelerate the growth of our AI cloud business even further in 2026 and beyond.”
Shares in US-listed Yandex were suspended in 2022 following Russia’s full-scale invasion of Ukraine.
After a protracted negotiation with the Kremlin, Yandex struck a $5.4bn deal in February to sell its core Russian business to a consortium of investors. Nebius was formed from the remainder of Yandex’s former international operations.