- What is Nebius and Why Does Microsoft Need It?
- What Does The Nearly $20 Billion Nebius-Microsoft Deal Entail?
- A Glimpse into Nebius's Financials and Future
Nebius (NBIS) stock surged by as much as 60% in extended trading hours on September 8 . after the announcement of a colossal deal with Microsoft, valued at nearly $20 billion. The surge, however, occurred after the market's close, meaning the company's market capitalization stood at $15.6 billion at the end of the normal trading day. In the regular trading session, Nebius share price ended 2% lower at $64.06, according to Google Finance.
Let’s delve deep into the multi-billion dollar agreement that has everyone talking, why Nebius's stock soared to such heights and what this Amsterdam-based company actually does.
What is Nebius and Why Does Microsoft Need It?
Nebius is a tech company that provides the essential infrastructure for artificial intelligence (AI). It specializes in providing access to large-scale clusters of Graphics Processing Units (GPUs), which are the specialized chips essential for training and running complex AI models.
If AI models are the brains, Nebius provides the powerful nervous system and the secure room to house them. Think of it like this, if a grand India wedding is the AI app, Nebius is the company that provides the massive, well-equipped marriage hall with uninterrupted power, top-notch security, and all the necessary behind-the-scenes arrangements to ensure the event runs smoothly.
The company, which was spun out of the Russian tech giant Yandex, has been expanding its global footprint, with data centers in Europe and the United States. So, why would a tech behemoth like Microsoft need Nebius? The answer lies in the insatiable demand for AI computing power.
Microsoft has been investing heavily in AI, most notably through its partnership with ChatGPT parent OpenAI. This has put a strain on its own cloud computing platform, Azure. By partnering with Nebius, Microsoft can quickly and efficiently scale up its AI infrastructure without having to build all the necessary data centers from scratch.
What Does The Nearly $20 Billion Nebius-Microsoft Deal Entail?
The agreement between Nebius and Microsoft is a multi-year pact that could be worth up to $19.4 billion. Under the terms of the deal:
- Nebius will provide Microsoft with dedicated GPU infrastructure capacity.
- Capacity will come from Nebius’s new data center in Vineland, New Jersey.
- Initial contract value: $17.4 billion.
- Additional option: Microsoft can purchase up to $2 billion in extra services.
This deal is a significant win for Nebius, providing it with a substantial and predictable revenue stream. For Microsoft, it's a strategic move to ensure it has the necessary computing power to stay ahead in the competitive AI landscape. The deal also highlights a growing trend of "neocloud" providers like Nebius partnering with major tech companies to meet the surging demand for AI infrastructure.
A Glimpse into Nebius's Financials and Future
Prior to this landmark deal, Nebius had already been on a strong growth trajectory, with its stock price more than doubling in 2025. The company has been actively raising capital to fund its expansion, including a significant investment from GPU giant Nvidia. The Microsoft deal will be financed through a combination of cash flow from the agreement itself and debt secured against the contract.
While Microsoft is now its most prominent client, Nebius has also secured partnerships with others like Cloudflare and Shopify. Its subsidiary, Avride, is also working with major names like Uber and Hyundai in the autonomous driving sector. This deal with Microsoft is perfect for Nebius as it validates the company's business model and also provides it with the resources to accelerate its growth in the AI infra market. As AI becomes more prominent, companies like Nebius that provide the essential building blocks will play a crucial role in the near future.
Disclaimer:
The content is meant for education and general information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Past performance is not indicative of future returns. The securities quoted are exemplary and are not a recommendation. This in no way is to be construed as financial advice or a recommendation to invest in any specific stock or financial instrument. The figures mentioned in this article are indicative and for general informational purposes only. Readers are encouraged to verify the exact numbers and financial data from official sources such as company filings, earnings reports, and financial news platforms. The Company strongly encourages its users/viewers to conduct their own research, and consult with a registered financial advisor before making any investment decisions. All disputes in relation to the content would not have access to an exchange investor redressal forum or arbitration mechanism. Registered office address: Office No. 507, 5th Floor, Pragya II, Block 15-C1, Zone-1, Road No. 11, Processing Area, GIFT SEZ, GIFT City, Gandhinagar – 382355. IFSCA Broker-Dealer Registration No. IFSC/BD/2023-24/0016, IFSCA DP Reg No: IFSC/DP/2023-24/010