Microsoft signs $17.4B GPU deal with Nebius

Microsoft signs $17.

• Microsoft has agreed a $17.4bn deal with Nebius to secure GPU capacity over five years.
• The deal highlights the escalating demand for AI infrastructure and the shift towards outsourcing cloud services.

What happened: Microsoft secures massive GPU capacity deal with Nebius

Microsoft has sealed a groundbreaking agreement with Amsterdam-based Nebius to secure GPU capacity worth $17.4 billion over five years. The deal could increase to $19.4 billion depending on usage. The capacity will be delivered from Nebius’s new Vineland, New Jersey data centre, which will open later this year.

Nebius, which originated from Yandex’s international assets, focuses on providing cloud services specifically for AI workloads. The contract with Microsoft is Nebius’s largest to date and one of the largest GPU infrastructure deals ever made. It highlights the growing reliance on specialised cloud services for handling AI demands.

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Why it’s important

The agreement is a major step in addressing the rising need for GPU compute power in AI. Microsoft, which has faced surging demand for AI services such as Azure OpenAI Service and Copilot, has struggled to meet its GPU needs. This deal with Nebius provides Microsoft with guaranteed access to critical infrastructure, allowing the company to expand its AI services without heavily investing in its own data centres.

For Nebius, the deal offers financial stability and crucial cash flow for further growth. It helps the company expand in the US and Europe, while targeting $1 billion in annual recurring revenue by 2026. This agreement positions Nebius as a leader in the fast-growing AI infrastructure market, giving it a strong foothold among cloud providers focused on AI workloads.

The announcement sparked investor optimism, with Nebius’s shares jumping over 30% in response. The deal underscores the growing importance of cloud-based AI infrastructure and the increasing trend of outsourcing these services to specialised providers like Nebius.