Microsoft (MSFT) has struck a deal worth up to $20 billion with Nebius (NBIS), a fast-rising AI cloud infrastructure provider, to lease computing power over the next five years, sending Nebius shares up as much as 45% in after-hours trading. The agreement highlights Big Tech’s urgent race to secure access to GPUs, the chips powering modern AI models.
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Nebius, a $15 billion company spun off from Yandex last year, will supply Microsoft with GPU capacity from its new data center in Vineland, New Jersey. The contract is valued at $17.4 billion initially, but could expand to $19.4 billion if Microsoft boosts its compute needs.
CoreWeave Climbs After Nebius Deal
Shares of Nebius led the market reaction, while rival CoreWeave (CRWV), another major neocloud provider, also rose 5% as the deal highlighted ongoing demand for AI infrastructure. CoreWeave, which has emerged as a leading supplier since its IPO, benefited from spillover investor interest in GPU-focused providers.
The rally shows how investors are rewarding firms at the core of AI compute supply. GPUs are now seen as a new asset class, with neocloud players raising billions in debt backed by chip inventories and long-term contracts.
Microsoft Expands AI Spending
For Microsoft, the Nebius tie-up comes as its yearly AI capital spend is set to reach $120 billion, up from $88 billion last year. That’s almost four times its 2023 outlay, reflecting its strong push to lead in the AI race.
Microsoft had earlier signed contracts worth up to $10 billion with CoreWeave but chose not to exercise an extra $12 billion capacity option. The Nebius deal broadens its supplier base while locking in access to key GPU resources.
Is Microsoft a Buy, Hold or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 32 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 22.79% rally in its share price over the past year, the average MSFT price target of $625.98 per share implies 25.65% upside potential.
