Nebius' Monster Microsoft Deal Fuels Further Expansion

Nebius (NBIS) is the latest AI neocloud making big moves, yesterday announcing a $17.4 billion contract with Microsoft and today announced $3 billion in financing moves that will fuel further expansion.

Under the five-year contract, which can expand to $19.4 billion, Microsoft will get access to capacity in Nebius's new Vineland, New Jersey datacenter. That 300 MW facility was announced in March.

Microsoft will receive GPU capacity in "several tranches during 2025 and 2026," according to Nebius's SEC filing.

Nebius's Growth Spurt

The Microsoft deal pushed Nebius's stock up 48% on Monday, to $95.64. Nebius is in rapid growth mode, as you'd expect, having announced Q2 2025 revenues of $105 million, up 625% year-over-year and roughly double its first-quarter revenues.

Along with that report in August, Nebius predicted it would hit an annual run rate of $900 million to $1.1 billion in revenues by the end of 2025. Quarterly revenues would more than double if that forecast is met, and Nebius was already planning for expansion to feed those numbers. The company said it's in the process of securing more than 1 GW of power commitments by the end of 2026.

The AI Datacenter Race

Nebius differs from most neoclouds in that it didn't start in the cryptocurrency world. It started as part of Yandex, the Russian search engine that was publicly traded on the US NASDAQ market. After Russia's invasion of Ukraine, Nebius incorporated in The Netherlands and divested its Russian assets, including Yandex.

Nebius frequently comes up in neocloud discussion because it's publicly traded. Lately, however, CoreWeave and Crusoe have gotten more attention for their audacious expansion plans, built largely (if not entirely) for deep-pocketed OpenAI. That means big financing for large campuses, the kinds of big numbers that generate headlines.

Both are also expanding their purview beyond technology. They've become closer to the real estate investment trust (REIT) model that fuels datacenter giants like Equinix and Digital Realty. CoreWeave's acquisition of Core Scientific signaled a desire to operate its own datacenters rather than leasing. Crusoe is scouting locations for campus development and recently announced a 1.8 GW Wyoming project.

(Incidentally: Today, CoreWeave branched out in yet another direction by launching CoreWeave Ventures. The neocloud plans to fund startups and give them "accelerated access" to its cloud. Taking a page from other tech giants, notably NVIDIA, CoreWeave is investing in its potential future customers.)

Nebius could well follow suit. Following up the Microsoft deal, Nebius proposed a share sale to raise $1 billion and a separate, two-part debt offering totaling $2 billion. That money is earmarked for more expansion, including scouting for datacenter power commitments.

Nebius still leases datacenter space; in fact, the Vineland facility is part of a campus being built out by French company DataOne. But if the company wants to join the other neoclouds that build their own facilities, that means raising debt, which in turn requires having collateral. GPU hoards and large contracts can provide that collateral. So in more ways than one, Microsoft's money can help Nebius keep up with the relentless pace of datacenter expansion.