Why Nebius Group Stock Went to the Moon Today

Key Points

• Dutch tech company Nebius just signed a five-year, $19.4 billion data center lease with Microsoft.

• Nebius will spend heavily to build a new data center in New Jersey.

• Microsoft's cash will help finance the building.

• 10 stocks we like better than Nebius Group ›

Netherlands-based Nebius Group (NASDAQ: NBIS) stock shot to the moon Tuesday morning, soaring 40% through 9:45 a.m. ET after announcing it has signed a "multi-billion dollar agreement with Microsoft for AI infrastructure."

And how much is "multi-billion," you ask? Well, according to Reuters, the deal will be worth $17.4 billion to Nebius over the next five years -- and potentially as much as $19.4 billion.

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Image source: Getty Images.

Who is Nebius?

You've never heard of Nebius? That's no surprise. Neither had I. But according to data from S&P Global Market Intelligence, it's a pretty interesting company.

Valued at $15.3 billion (probably quite a bit more than that after today's jump), S&P says Nebius took in only $249 million in revenue last year -- but turned $243.5 million of that into profit. (That's a net profit margin of 97.7%.)

Impressive. And now I can only imagine what kind of profits Nebius might produce with $19.4 billion in new revenue coming in.

What's next for Nebius?

According to the company's 6-K filing with the SEC, Nebius will be providing "dedicated GPU infrastructure capacity" to Microsoft (NASDAQ: MSFT) "in tranches" -- which is to say, leasing out data center access in stages -- at its new data center in Vineland, New Jersey. Leasing will begin in 2025 and continue to expand in 2026, then continue through at least 2031.

Nebius will incur significant capital expenses as it conducts its buildout, at the same time as it takes in significant revenue from Microsoft. The company intends to use the latter to finance the former, but will also be taking on debt to pay for the new data center's construction.

It's a heavy financial commitment, and only time will tell if it's worth it for Nebius.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends Nebius Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.