The five-year agreement with Nebius marks one of the largest AI infrastructure contracts ever, as Microsoft scrambles to secure computing power for the AI race.
Nebius Group’s share jumps to 47%, following its mammoth deal with Microsoft worth up to $17.4 billion over five years. This agreement positions Nebius as a critical player in Microsoft's aggressive AI expansion plans.
For some context, Nebius has emerged from the international operations of the former Russian internet giant Yandex. It specializes in GPU-powered infrastructure specifically designed for training and deploying artificial intelligence models. Moreover, Nebius is also known for having a global footprint with R&D hubs across Europe, North America, and Israel.
The Numbers Tell the Story
The deal structure reveals just how desperate major tech companies have become for AI computing power. Microsoft has committed to the initial $17.4 billion arrangement. Additionally, according to Reuters, Microsoft may also acquire additional services capacity under the deal, bringing the total contract value to about $19.4 billion.
GPU infrastructure will roll out in multiple phases throughout 2025 and 2026, addressing what Microsoft's own CFO Amy Hood admitted in July was an ongoing capacity constraint problem. Despite Microsoft's rapidly growing cloud footprint, demand for AI services continues.
CEO Volozh Celebrates Strategic Win
Arkady Volozh, founder and CEO of Nebius, couldn't hide his excitement about the deal's implications.
"Nebius's core AI cloud business, serving customers from AI startups to enterprises, is performing exceptionally well…The economics of the deal are attractive in their own right, but, significantly, the deal will also help us to accelerate the growth of our AI cloud business even further in 2026 and beyond."
Volozh also hinted that this Microsoft partnership is just the beginning, noting he expects to
"secure significant long-term committed contracts with leading AI labs and big tech companies" with "more to come."
The Bigger Picture
Microsoft had previously relied heavily on CoreWeave for extra GPU capacity, but notably passed on locking in a $12 billion long-term contract with them. Now, the Nebius deal highlights a fundamental reality of today's tech landscape: the companies controlling AI infrastructure hold tremendous power.
With investors including Nvidia and Accel Partners backing Nebius, the company has positioned itself as a crucial bridge between chip manufacturers and the tech giants hungry for computing power. For Microsoft, this agreement represents more than just securing GPUs – it's about maintaining a competitive edge in an AI arms race where computational resources determine who can train the next breakthrough model.
As the dust settles on this announcement, one thing becomes crystal clear: in the new AI economy, infrastructure providers like Nebius is becoming the kingmakers of Silicon Valley's next chapter.
