The Surging Under-the-Radar AI Tech Stock Backed by Microsoft's $17 Billion Bet

In the race to dominate the AI revolution, one name is quietly rising to prominence: Nebius Group (NBIS). The Dutch AI infrastructure firm has secured a landmark $17.4 billion multi-year deal with Microsoft, a partnership that not only underscores the tech giant's aggressive AI ambitions but also positions Nebius as a critical player in the global AI infrastructure arms race. For investors seeking high-conviction growth opportunities in the AI ecosystem, this deal—and Nebius' broader strategy—offers a compelling case study.

A Strategic Partnership with Microsoft: Fueling AI's Next Frontier

Microsoft's investment in Nebius is more than a financial transaction—it's a strategic bet on the future of AI. The deal, spanning five years (with an option to extend through 2031), grants Microsoft access to dedicated GPU infrastructure from Nebius' new data center in Vineland, New JerseyNebius Stock Price Surges on Big AI Infrastructure Deal^[1]. This facility will serve as a cornerstone for Microsoft's AI cloud expansion, enabling the delivery of high-performance computing (HPC) and generative AI services to enterprises worldwideNebius Signs $17.4 Billion AI Infrastructure Deal with Microsoft^[2].

The scale of the partnership is staggering. If Microsoft increases its demand, the total value could rise to $19.4 billionCan Nebius Become the Next Big AI Player With $17.4B Microsoft Deal^[3]. This level of commitment from Microsoft—a company with a $2.5 trillion market cap—signals confidence in Nebius' ability to scale its infrastructure rapidly. As noted by Business Insider, the deal “highlights Microsoft's ongoing investment in AI to maintain a competitive edge”Nebius Stock Price Surges on Big AI Infrastructure Deal^[1], a priority as rivals like Google and Amazon intensify their own AI bets.

Financial Projections: A Path to Profitability

Nebius' financial roadmap is equally impressive. The company has outlined run-rate revenue targets of $750 million to $1 billion by 2025, driven by the Microsoft deal and its existing AI cloud businessWill NBIS’ Tie-Up With NVDA Accelerate its AI Infrastructure Growth?^[4]. First-quarter 2025 results already show a 385% year-over-year revenue surge, validating its growth trajectoryWill NBIS’ Tie-Up With NVDA Accelerate its AI Infrastructure Growth?^[4]. While adjusted EBITDA is expected to remain negative in 2025, Nebius anticipates turning this metric positive by mid-2025, leveraging cash flow from the Microsoft contract and secured debtCan Nebius Become the Next Big AI Player With $17.4B Microsoft Deal^[3].

The AI infrastructure market itself is a tailwind. Projected to grow at a 26.6% CAGR and reach $1.01 trillion by 2031, this sector offers Nebius a vast addressable marketWill NBIS’ Tie-Up With NVDA Accelerate its AI Infrastructure Growth?^[4]. With its partnership with NVIDIA—integrating the Blackwell AI Factory platform—Nebius is uniquely positioned to capitalize on this growthWill NBIS’ Tie-Up With NVDA Accelerate its AI Infrastructure Growth?^[4].

Competitive Advantages: Beyond the Microsoft Deal

Nebius' success hinges on more than just Microsoft. The company's Model Context Protocol (MCP) Servers are redefining AI cloud computing, enabling multi-agent interoperability and scalabilityNBIS on the Rise: Decoding the Surge^[5]. Analysts from DA Davidson have highlighted MCP's potential to become a standard in agentic AI ecosystems, a critical differentiator in a crowded marketNBIS on the Rise: Decoding the Surge^[5].

Additionally, Nebius is scaling its infrastructure rapidly. By 2026, the firm aims to expand its AI cloud capacity to 1 gigawatt (GW), a move that will further solidify its position as a top-tier AI infrastructure providerNBIS on the Rise: Decoding the Surge^[5]. This scalability is critical as demand for GPU-powered computing surges, with platforms like Netcracker's Agentic AI Solution already adopting Nebius' technologyNBIS on the Rise: Decoding the Surge^[5].

Analyst Insights: A “Buy” with Conviction

The investment community is taking notice. Goldman Sachs initiated coverage on Nebius with a “Buy” rating and a $68 price target, citing its full-stack software offering and cost advantagesNBIS on the Rise: Decoding the Surge^[5]. Similarly, DA Davidson has emphasized the company's ability to attract high-profile clients, with the Microsoft deal serving as a “credible endorsement” of its capabilitiesCan Nebius Become the Next Big AI Player With $17.4B Microsoft Deal^[3].

Financially, Nebius is also leveraging Microsoft's strong credit profile to fund capital expenditures, reducing its reliance on external financingCan Nebius Become the Next Big AI Player With $17.4B Microsoft Deal^[3]. This prudent approach, combined with its recurring revenue model, enhances its long-term sustainability.

Conclusion: A High-Conviction Play in AI's Infrastructure Layer

For investors, Nebius represents a rare combination of strategic alignment with industry leaders, robust financial projections, and innovative technology. The Microsoft deal is not just a validation of its capabilities—it's a catalyst for exponential growth. As AI becomes the backbone of global industries, Nebius' role in powering this transformation is poised to deliver outsized returns.

In a market where AI infrastructure is the new oil, Nebius Group is the well worth tapping.