Nebius Skyrockets 60% After $19.4 Billion AI Chip Deal with Microsoft

Nebius Group has made headlines by securing a five-year agreement worth up to $19.4 billion with Microsoft, focusing on the provision of NVIDIA graphics chips for artificial intelligence model training. Following this announcement, Nebius experienced a remarkable surge of over 60% in after-hours trading.

The Amsterdam-based company, which emerged with a new identity after Russian investors acquired Yandex's Russian-language search engine and other assets last year, will provide computational resources to Microsoft through a data center located in New Jersey. This agreement underscores the increasing demand for cloud infrastructure capable of handling AI workloads, a gap Microsoft is actively addressing through partnerships.

Microsoft's strategic collaborations extend to notable entities like OpenAI, which utilizes Microsoft Azure as it scales up support for its rapidly adopted ChatGPT. The tech giant has also sought additional AI computing capacity through alliances with firms like CoreWeave. Despite Nebius's new agreement, CoreWeave experienced a modest stock increase of about 5% during the same after-hours trading session, while Microsoft shares remained relatively unchanged.

Nebius is exploring multiple funding avenues to accelerate its growth beyond initial projections. According to SEC filings, the company plans to deploy Graphics Processing Unit (GPU) services in phases during this year and next, with the contract's total value over its term reaching $17.4 billion. Microsoft retains an option to purchase an additional $2 billion in services.

Founded in 1989, Nebius has been expanding its footprint in the United States, announcing new office locations in San Francisco, Dallas, and New York last November. The company stated in a blog post that this expansion would enable them to better serve American clients and support the future growth of innovative AI enterprises in the region.

Before the after-hours trading buzz, Nebius had already seen its market capitalization more than double this year, closing with a valuation slightly above $15 billion on Monday.