The Redmond, Washington-based company is focused on building new data centres and equipping them with expensive servers and networking equipment
[SEATTLE] Microsoft struck a multiyear deal worth nearly US$20 billion to get artificial intelligence (AI) cloud computing power from Nebius Group, the technology company spun out from Russian Internet giant Yandex.
The deal will be worth US$17.4 billion to US$19.4 billion till 2031 to Nebius, whose investors include Nvidia and Accel Partners, the company said on Monday (Sep 8) in a filing with the US Securities and Exchange Commission.
The agreement represents a massive windfall for Nebius, which has been working to capitalise on the AI frenzy by expanding its data centre operations. Microsoft, meanwhile, is seeking to address a persistent shortage in AI cloud computing capacity.
Shares of Nebius gained about 50 per cent in late trading on the announcement, while Microsoft stock was little changed. Already, Nebius shares had more than doubled this year to the close.
Facing accelerating demand for AI services, Microsoft has ramped up its capital spending to record levels in the last few years. The Redmond, Washington-based company is focused on building new data centres and equipping them with expensive servers and networking equipment.
Despite that rapidly growing footprint, demand for cloud and AI services continues to exceed supply. Microsoft chief financial officer Amy Hood told investors in July that the company expected “to remain capacity constrained” till the end of this calendar year.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Microsoft has often not had enough capacity to serve its own needs, including the development of AI products and the sale of Azure-branded AI services to customers. It also has a contract to provide AI computing power to ChatGPT maker OpenAI and has struck deals for excess capacity from companies such as CoreWeave.
Microsoft did not say how it would use the Nebius resources and did not immediately respond to a request for comment.
Nebius said that it will provide Microsoft with dedicated capacity from a new data centre in Vineland, New Jersey, beginning later this year.
SEE ALSO
The deal will significantly increase the growth of Nebius’ AI cloud business in 2026, the company said in the filing. It will also require the cloud company to find ways to finance the faster growth. The capital expenses associated with this deal will be covered by cash from the deal and debt secured against the contract, Amsterdam-based Nebius said.
It is “evaluating a number of additional financing options to enable significantly faster growth than originally planned and will update the market on its financing strategy in due course”, Nebius said. BLOOMBERG
