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Microsoft expands its access to AI infrastructure in New Jersey.
Netherlands-based Nebius Group (NBIS 49.67%) stock shot to the moon Tuesday morning, soaring 40% through 9:45 a.m. ET after announcing it has signed a “multi-billion dollar agreement with Microsoft for AI infrastructure.”
And how much is “multi-billion,” you ask? Well, according to Reuters, the deal will be worth $17.4 billion to Nebius over the next five years — and potentially as much as $19.4 billion.
Image source: Getty Images.
Who is Nebius?
You’ve never heard of Nebius? That’s no surprise. Neither had I. But according to data from S&P Global Market Intelligence, it’s a pretty interesting company.
Valued at $15.3 billion (probably quite a bit more than that after today’s jump), S&P says Nebius took in only $249 million in revenue last year — but turned $243.5 million of that into profit. (That’s a net profit margin of 97.7%.)
Impressive. And now I can only imagine what kind of profits Nebius might produce with $19.4 billion in new revenue coming in.
What’s next for Nebius?
According to the company’s 6-K filing with the SEC, Nebius will be providing “dedicated GPU infrastructure capacity” to Microsoft (MSFT 0.11%) “in tranches” — which is to say, leasing out data center access in stages — at its new data center in Vineland, New Jersey. Leasing will begin in 2025 and continue to expand in 2026, then continue through at least 2031.
Nebius will incur significant capital expenses as it conducts its buildout, at the same time as it takes in significant revenue from Microsoft. The company intends to use the latter to finance the former, but will also be taking on debt to pay for the new data center’s construction.
It’s a heavy financial commitment, and only time will tell if it’s worth it for Nebius.
About the Author
Rich Smith is a contributing Motley Fool defense and stock market analyst covering publicly traded and emerging companies in defense, space, aerospace, and other sectors. Prior to The Motley Fool, Rich practiced international corporate law for Clifford Chance in Russia, and for the Russian-Ukrainian Legal Group in Moscow, Kyiv, and Washington, D.C. He holds a bachelor’s degree in international relations from the College of William & Mary, a law degree from the University of Baltimore, and a language certification from the International Institute of Russian Language & Culture in Tver, Russian Federation. The Globe and Mail once featured him as “one of the best stock pickers since 2009.”
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft. The Motley Fool recommends Nebius Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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