Nebius Signs $19.4B Deal With Microsoft For AI Computing

Nebius Group, a supplier of Nvidia graphics chips for training artificial intelligence models, has signed a five-year agreement with Microsoft valued at up to 19.4 billion dollars. The agreement involves Nebius providing computational resources to Microsoft through a data center in New Jersey. This partnership comes as Nebius rebranded from "Yandex NV" following the acquisition of Yandex's Russian language search engine and other assets by Russian investors last year.

The demand for cloud infrastructure capable of handling AI workloads is currently high, and Microsoft is increasingly seeking third-party collaborations to address this gap. As a core customer of Microsoft's Azure cloud services, OpenAI has been actively searching for additional computational support due to the rising adoption of ChatGPT. Google is the latest provider of computational resources for OpenAI.

In addition to its collaboration with Nebius, Microsoft has also partnered with CoreWeave to obtain more AI computing capabilities. OpenAI has signed a direct cooperation agreement with CoreWeave valued at tens of billions of dollars.

Nebius is considering various financing methods to achieve growth faster than originally planned. The company has indicated in a filing with the U.S. Securities and Exchange Commission (SEC) that GPU services will be deployed in multiple batches this year and next year. By 2031, the total value of the contract will be 17.4 billion dollars, with Microsoft having the option to purchase an additional 2 billion dollars worth of services.

Founded in 1989, Nebius has been expanding its presence in the U.S. market. Last November, the company announced the opening of offices in San Francisco, Dallas, and New York to further its growth in the region. The company stated in a blog post that expanding its business in the U.S. would allow it to be closer to its customers and support the future development of innovative AI enterprises in the country.

Prior to the post-market surge in its stock price, Nebius's market capitalization had already more than doubled this year. At the close of trading on Monday, its market capitalization was slightly over 15 billion dollars.