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Microsoft Corp. entered a historic contract with AI infrastructure provider Nebius Group N.V. to gain access to future use of elite computing power on GPUs. The acquisition highlights the increased significance of data centre capacity in the artificial intelligence race across the world. It also marks a change of strategy in Microsoft as it becomes diversified in terms of the supply agreements of the past. Stock market investors took the news positively, and the share of Nebius soared after the announcement.
Microsoft invests in a Long-term Contract of 17.4 billion
The contract is estimated to cost 17.4 billion dollars in five years, and it is provided that the sum may also amount to 19.4 billion in case Microsoft increases its computing needs. The speciality GPU infrastructure will be the new Nebius data centre in Vineland, New Jersey, which will assume gradual operation later this year. Nebius assured that the deal will finance the building of the plant and buy the needed chips. The funding will be derived from contract cash flow and debt against the agreement. The firm also stated that it is looking into other funding opportunities to accelerate its growth beyond the initial roadmap.
CEO Arkady Volozh Plans Growth
The founder and chief executive of Nebius, Arkady Volozh, stated that the deal is the first of a series of long-term contracts anticipated with key AI laboratories and large technology firms. He highlighted that the economics of the deal are good, but there is more meaning in helping Nebius to fast-track its AI cloud business growth after 2026.
Nebius was founded in Amsterdam, spun off Yandex NV in February 2023 and is supported by Nvidia Corp., among others. Its future plant in Vineland will provide high-performance GPU processing capacity at a time when the world is experiencing an increase in the need to compute. It was well supported by investors, with Nebius shares rising almost 40 per cent late in the trading session after the announcement.
Microsoft Reverts to a New Supplier, CoreWeave
Microsoft had generously depended on CoreWeave Inc. prior to concluding this deal to augment its capacity for GPUs. Nevertheless, it failed to enter into a lengthy agreement of such size and opted not to buy 12 billion units of the GPUs provided by CoreWeave. That was subsequently locked in by OpenAI, and Microsoft sought alternative infrastructure alliances. Resorting to Nebius, Microsoft will be able to obtain a purposeful facility guaranteed over a period of years. The transaction places the company in a position to cope with the increasing computing needs and lessen the dependency on temporary solutions in a progressively competitive setting.
With infrastructure deals in the lead, the AI Race Intensifies
The observers also observe that the high-value contracts like Microsoft with Nebius deals are now becoming necessities in the AI infrastructure supply chain. As the need to increase power through GPUs grows across the globe, businesses are locking in capacity contracts extending out to years to prevent shortages and continue with AI advancement.
The size of the Vineland project can be used to demonstrate the influence that investment in data centres and chips is having on the future development of artificial intelligence. In the case of Microsoft, the deal will guarantee it a continuous flow of resources to promote its growing AI projects, and it will also serve as a strategic means to counter competition in the infrastructure sector, taking on new dimensions.
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