After-hours surge! Nebius signs an AI cloud computing power order worth up to $19.4 billion with Microsoft

According to Zhitong Finance APP, Microsoft (MSFT.US) has reached a multi-year agreement with Nebius (NBIS.US) worth nearly $20 billion, aimed at acquiring artificial intelligence cloud computing capabilities from this technology company that was spun off from the Russian internet giant Yandex. In documents submitted to the U.S. Securities and Exchange Commission on Monday, the company stated that the deal is expected to bring Nebius between $17.4 billion and $19.4 billion in revenue by 2031. Nebius's investors include NVIDIA (NVDA.US) and Accel Partners. The agreement represents a significant gain for Nebius. The company has been working to expand its data center business by capitalizing on the artificial intelligence boom. Meanwhile, Microsoft is also striving to address the ongoing shortage of artificial intelligence cloud computing capabilities. Following the announcement, as of the time of writing, Nebius's stock price rose by about 43% in after-hours trading, while Microsoft's stock price remained relatively unchanged. As of the market close, Nebius's stock price has more than doubled this year. In response to the growing demand for artificial intelligence services, Microsoft has significantly increased its capital expenditures over the past few years, reaching record levels. The company, headquartered in Redmond, Washington, is focused on building new data centers and equipping them with expensive servers and networking equipment. Despite the rapid expansion of cloud services and artificial intelligence services, demand continues to outstrip supply. Microsoft Chief Financial Officer Amy Hood stated to investors in July that the company expects to "still face capacity constraints by the end of this fiscal year." Microsoft often struggles to meet its own demands, including developing artificial intelligence products and selling Azure-branded artificial intelligence services to customers. Additionally, it has signed contracts with OpenAI (the provider of ChatGPT) to provide artificial intelligence computing capabilities and has reached agreements with companies like CoreWeave (CRWV.US) to utilize their excess capacity. Nebius stated that starting later this year, the company will provide dedicated server capacity for Microsoft from its new data center located in Wellington, New Jersey. The company indicated in its documents that this transaction will significantly drive the growth of Nebius's artificial intelligence cloud business in 2026. At the same time, it requires the cloud company to seek ways to fund faster growth. Amsterdam-based Nebius stated that the capital expenditures related to this transaction will be covered by cash from the deal and debt based on contract terms. Nebius stated: "We are evaluating various additional financing options to achieve a faster expansion rate than originally planned and will announce our financing strategy to the market at the appropriate time."