Shares of artificial intelligence infrastructure firm Nebius Group experienced a remarkable increase of 40% on Tuesday, following the announcement of a significant multi-billion-dollar deal with tech giant Microsoft. This partnership marks a pivotal moment for the Amsterdam-based firm, which has quickly established itself in the competitive AI landscape.
Nebius Group disclosed that it has entered a multi-year agreement with Microsoft, valued at up to $19.4 billion, aimed at supplying cloud computing power specifically for AI workloads. This substantial contract is expected to generate $17.4 billion for Nebius by 2031. The company's technology focuses on providing graphics processing units (GPUs) essential for training advanced AI models, making it a crucial player in the AI infrastructure sector.
The news of the Nebius-Microsoft deal ignited investor enthusiasm, leading to a remarkable 60% rise in Nebius shares during extended trading on Monday, with the upward trend continuing into Tuesday. This surge reflects growing confidence in Nebius's role in the AI sector, which is increasingly vital as demand for powerful computing resources continues to rise. Additionally, the announcement positively influenced shares of rival AI infrastructure firm CoreWeave, which saw an 8% increase following the news.
The Nebius-Microsoft agreement underscores the sustained demand for robust computing equipment necessary for developing and operating sophisticated AI systems. Last month, Nvidia, a leading figure in AI infrastructure, reported earnings that exceeded expectations, highlighting a revenue increase for the quarter ending in June. Nvidia's Chief Financial Officer, Colette Kress, projected that AI infrastructure spending could reach between $3 trillion and $4 trillion by the end of the decade, indicating a long-term growth trajectory for the industry.
Despite the optimism surrounding AI infrastructure growth, the market remains cautious. Last month, OpenAI CEO Sam Altman and various experts expressed concerns regarding the potential for an AI market bubble, especially given the soaring valuations of private AI firms in recent years. Reports indicate that OpenAI is nearing a staggering $500 billion valuation, while Anthropic secured a $13 billion funding round at a valuation of $183 billion just last week.
As the AI landscape continues to evolve, the strategic partnership between Nebius Group and Microsoft stands as a testament to the escalating demand for AI capabilities, while also raising questions about market sustainability and valuation integrity.
