Can Nebius Become the Next Big AI Player With $17.4B Microsoft Deal?

Nebius Group N.V. (NBIS) has recently signed a multi-year AI infrastructure agreement with Microsoft (MSFT). Under the terms of the five-year agreement, NBIS will provide dedicated GPU capacity to Microsoft from its newly constructed data center in Vineland, NJ. By securing long-term contracts, Nebius is unlocking financial synergies to accelerate growth, scale its cloud business, and have a competitive edge over more established hyperscalers in the AI infrastructure space.

Following the deal announcement yesterday, NBIS’ shares have skyrocketed 53% in pre-market trading today.

The GPU services will roll out in several tranches during 2025 and 2026, with the agreement valued at approximately $17.4 billion through 2031. Microsoft could also purchase extra services or capacity as per the terms of the deal, which would raise the total value to around $19.4 billion. Although constructing new data centers and increasing capacity is capital-intensive, Nebius has outlined its financing plan.

The company intends to finance the related capital costs using cash flow from the Microsoft deal, ensuring continued revenue support. The deal permits debt financing on favorable terms, supported by MSFT’s strong credit. Additionally, management is exploring other financing options to boost growth beyond current projections, with further market updates as its financing strategy develops.

While this represents NBIS’ first major long-term contract with a big tech firm, the company has indicated that more multi-faceted deals are likely to follow, further solidifying its capacity and reach in the booming AI cloud space. Moreover, NBIS continues to deepen its collaboration with NVIDIA (NVDA) to deliver next-gen AI infrastructure in global markets. In June, Nebius launched NVIDIA GB200 capacity in Europe and deployed Blackwell Ultra GPUs in the U.K., strengthening its AI infrastructure for businesses, research and public services.

Nonetheless, despite the NBIS-MSFT partnership to power the next generation of AI infrastructure, both players compete in the broader AI space, with NBIS challenging the tech giant for a greater share of the market. Another emerging contender that intensely competes with NBIS is CoreWeave (CRWV), a pure-play AI infra company that shares a strategic alliance with a powerhouse like NVDA, similar to Nebius.

Fierce Rivalry Looms for NBIS in AI Infrastructure

MSFT remains a dominant force in technology, leading cloud infrastructure through Azure while rapidly expanding in AI infrastructure. Its partnership with OpenAI has solidified Azure as a top platform for AI workloads, complemented by AI integration across Office, GitHub, and Dynamics.

Microsoft has transformed every Azure region into an AI-first environment with liquid cooling, adding over 2 GW of new data center capacity in the past year and now operating more than 400 data centers across 70 regions. MSFT plans to invest more than $30 billion in capex for the first quarter of fiscal 2026, up from $24.2 billion in the fourth quarter of fiscal 2025.

CRWV continues to ramp up investments in data centers and server infrastructure to keep pace with the ongoing traction in customer demand. In March, it signed a deal worth up to $11.9 billion to provide AI infrastructure to OpenAI, boosting its capacity to train and run models for millions of users. As part of the agreement, OpenAI will invest $350 million in CoreWeave through stock. CRWV remains on track to deliver over 900 MW of power by year-end, with a contracted backlog of $30.1 billion, up $4 billion sequentially and double year-to-date. This includes the $4 billion OpenAI expansion plus new wins from enterprises to AI start-ups.

The company is rapidly expanding its footprint, including a $6 billion data center investment in Lancaster, PA, and a joint venture project in Kenilworth, NJ, to meet rising demand. It has launched RTX PRO 6000 Blackwell GPU instances, offering faster AI performance and cost-efficient scalability. With broad NVIDIA Blackwell support and deep platform optimizations, CRWV solidifies its position as a top AI cloud provider.

Unlike NBIS, CRWV is on an acquisition spree to expand its footprint and advance AI infrastructure. By acquiring Weights & Biases in May 2025 and recently signing a deal to acquire OpenPipe, it is enhancing vertical integration and expanding reinforcement learning and fine-tuning capabilities to provide customers with greater flexibility in training, adapting, and optimizing AI models. Additionally, in July, CoreWeave agreed to acquire Core Scientific in a $9 billion all-stock deal, combining data center and power expertise with AI cloud strengths while reducing $10 billion in lease obligations.

NBIS’ Price Performance, Valuation and Estimates

Shares of Nebius have gained 131.2% year to date compared with the Internet – Software and Services industry’s growth of 27.7%.

In terms of price/book, NBIS’ shares are trading at 4X, the same as the Internet Software Services industry’s ratio.

The Zacks Consensus Estimate for NBIS’ 2025 earnings has seen an upward revision over the past seven days.

NBIS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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