Microsoft Corp. has signed a deal with artificial intelligence infrastructure provider Nebius Group N.V. worth up to nearly $20 billion to provide dedicated GPU infrastructure capacity from its new data center in Vineland, New Jersey, starting later this year.

The deal is worth $17.4 billion over five years, with a pre-purchased option clause extending the potential value to $19.4 billion if Microsoft increases its compute demands.

Nebius said it would finance the construction of its new data center and buy the necessary chips with cash flow from the deal as well as by raising debt secured against the contract. The company is also evaluating a number of additional financing options to enable significantly faster growth than originally planned and plans to update the market on its financing strategy in due course.

“In addition to our core business, we expect to secure significant long-term committed contracts with leading AI labs and big tech companies,” said Nebius founder and Chief Executive Arkady Volozh said in a statement. “I’m happy to announce the first of these contracts and I believe there are more to come. The economics of the deal are attractive in their own right, but, significantly, the deal will also help us to accelerate the growth of our AI cloud business even further in 2026 and beyond.”

Based in Amsterdam, Nebius was spun out of Russian search giant Yandex NV in February 2023 and has since been backed by Nvidia Corp., among others. Its upcoming Vineland facility, which the company plans to roll out in phases beginning later this year and extending into 2026, is promising access to fresh, high-performance GPU capacity, making it ideal for Microsoft’s growing computation needs.

Not surprisingly, the news was well-received by investors, and Nebius shares surged nearly 40% in late trading.

This deal comes after Microsoft previously relied heavily on CoreWeave Inc. for extra GPU capacity but did not sign a comparable long-term contract and passed on the opportunity to lock in $12 billion worth of CoreWeave’s GPU capacity. That capacity was subsequently snapped up by OpenAI instead.

The deal also highlights how high-value contracts like the new Nebius deal are increasingly vital in the AI infrastructure supply chain as the race for AI dominance continues at full speed.

Photo: Nebius