Microsoft has formalized a massive agreement with Amsterdam-based Nebius Group to lease GPU infrastructure capacity worth $17.4 billion over the next five years. The number will potentially rise to $19.4 billion depending on future demand.
Behind this landmark contract is the need to bolster Microsoft’s AI compute capabilities amid a global surge in generative AI workloads. Nebius will supply GPU-powered computing primarily from its forthcoming Vineland, New Jersey data center, scheduled to begin operations later this year.
In response to the announcement, Nebius’s market value soared, with its stock jumping around 33% to 44% during after-hours trading, hitting new highs. This reflects strong investor belief in Nebius’s role as a leading provider in the emerging “neocloud” sector, which specializes in high-performance AI infrastructure outside traditional cloud giants.
Nebius is well-positioned to support Microsoft’s infrastructure needs. Having originated from the international assets of Yandex, the company has been on a fast-growth trajectory. In December 2024, it raised $700 million in equity funding from investors including Nvidia and Accel to fund expansion, especially the rollout of Nvidia’s advanced Blackwell chips. Nebius also recently reported a 385% year-over-year increase in Q1 revenue to $55.3 million, reaffirming its rapid progress.
Beyond Texas and Finland, Nebius is building a global footprint, with infrastructure deployed across locations such as Kansas City, Missouri, Paris, Iceland, and its New Jersey campus. This growth is fueled by both equity and debt financing, with contract-backed loans expected to support the Vineland expansion.
Industry analysts highlight the strategic value of Nebius within the neocloud arena. While hyperscalers dominate general cloud usage, neocloud providers like Nebius offer specialized, cost-efficient GPU compute tailored for AI workloads. Some forecasts suggest the AI cloud market could soar from $87 billion in 2024 to $647 billion by 2030, with neoclouds capturing increasing market share.
Microsoft’s deal with Nebius underscores how hyperscalers are turning to niche infrastructure providers to meet rapidly growing AI hardware demands without deploying massive capex internally.