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(Reuters) - Nebius Group's shares surged nearly 55% to $99.2 on Tuesday as investors cheered its $17.4-billion deal supplying AI infrastructure to Microsoft over a five-year period.
The agreement, which could expand to $19.4 billion if Microsoft increases demand, underscores the growing need for high-performance AI data centers amid a global rush to develop advanced generative artificial-intelligence technologies.
The stock, which has more than doubled this year, rose 55% before the bell, while shares of rival CoreWeave gained 6.6%.
Nebius is set to add about $7.7 billion to its $15.3-billion market capitalization, if gains hold.
"We continue to believe that Nebius is well set up to bring on other high-profile customers, including other hyperscalers or frontier AI labs, as the company continues to build out their data center capacity with upcoming greenfield opportunities," said Alexander Platt, analyst at DA Davidson.
Microsoft, which has repeatedly flagged a shortage of AI cloud infrastructure due to soaring client needs, has been turning to third-party providers to bridge the gap.
The tech major has a similar multibillion-dollar deal with CoreWeave, which also has a substantial contract with OpenAI for AI computing resources.
Founded from the spinoff of Russian tech giant Yandex's assets, Amsterdam-based Nebius will primarily supply Microsoft with dedicated GPU infrastructure from the company's new data center in Vineland, New Jersey, beginning later this year.
Nebius' core business consists of providing clients with full-stack AI cloud services built on Nvidia computing, giving AI developers the software and hardware tools and services needed to build and run their models.
(Reporting by Kritika Lamba in Bengaluru; Editing by Pooja Desai)
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