Microsoft Corp. struck a multiyear deal worth nearly $20 billion to get AI cloud computing power from Nebius Group NV, the technology company spun out from Russian internet giant Yandex.
The deal will be worth $17.4 billion to $19.4 billion through 2031 to Nebius, whose investors include Nvidia Corp. and Accel Partners, that company said Monday in a filing with the US Securities and Exchange Commission.
The agreement represents a massive windfall for Nebius, which has been working to capitalize on the artificial intelligence frenzy by expanding its data center operations. Microsoft, meanwhile, is seeking to address a persistent shortage in AI cloud computing capacity.
Shares of Nebius gained about 50% in late trading of the announcement, while Microsoft stock was little changed. Already, Nebius shares had more than doubled this year through the close.
Facing accelerating demand for AI services, Microsoft has ramped up its capital spending to record levels in the last few years. The Redmond, Washington-based company is focused on building new data centers and equipping them with expensive servers and networking equipment.
Despite that rapidly growing footprint, demand for cloud and artificial intelligence services continues to exceed supply. Microsoft Chief Financial Officer Amy Hood told investors in July that the company expected “to remain capacity constrained” through the end of this calendar year.
Microsoft has often not had enough capacity to serve its own needs, including the development of artificial intelligence products and the sale of Azure-branded AI services to customers. It also has a contract to provide AI computing power to ChatGPT maker OpenAI and has struck deals for excess capacity from companies like CoreWeave Inc.
Microsoft didn’t say how it would use the Nebius resources and didn’t immediately respond to a request for comment.
Nebius said it will provide Microsoft dedicated capacity from a new data center in Vineland, New Jersey, beginning later this year.
The deal will significantly increase the growth of Nebius’ AI cloud business in 2026, the company said in the filing. It will also require the cloud company to find ways to finance the faster growth. The capital expenses associated with this deal will be covered by cash from the deal and debt secured against the contract, Amsterdam-based Nebius said.
It is “evaluating a number of additional financing options to enable significantly faster growth than originally planned and will update the market on its financing strategy in due course,” Nebius said.