Nebius Surges After Securing $17B Microsoft AI Infrastructure Deal
Shares climb over 5% as the cloud provider also reports a ninefold increase in AI revenue and raises its annual recurring revenue forecast to $1.1 billion.
Nebius Group (NASDAQ: NBIS) shares jumped in trading after the AI cloud provider announced a landmark multi-year partnership with Microsoft and posted staggering revenue growth, cementing its role as a critical supplier in the booming artificial intelligence infrastructure market.
The stock climbed more than 5% to $130.82, pushing its market capitalization over $32 billion. The move is the latest in a meteoric rise for the company, whose shares have soared from a 52-week low of $17.39 as demand for its specialized GPU-based cloud services explodes.
At the heart of the investor optimism is a massive partnership with Microsoft that will extend through 2031. Under the agreement, valued at over $17 billion, Nebius will provide significant AI cloud infrastructure capacity to support Microsoft's expanding AI services. The deal, which has the potential to grow to $19.4 billion, provides Nebius with a long-term, stable revenue stream from one of the world's largest technology companies and serves as a major validation of its platform.
The Microsoft partnership was followed by a blockbuster financial report for the second quarter of 2025. Nebius reported total revenue of $105.1 million, a stunning 625% increase from the same period last year. The growth was driven by a more than ninefold surge in its core AI cloud infrastructure division, highlighting the intense demand from hyperscalers and AI developers for the computing power needed to train and deploy large language models.
Buoyed by this performance, Nebius raised its forecast for Annual Recurring Revenue (ARR) for the end of 2025 to a range of $900 million to $1.1 billion, up significantly from a previous projection of $700 million to $1 billion. The company also noted that it had achieved positive adjusted EBITDA for its AI infrastructure business, a key milestone on its path to profitability.
The stock's incredible run, which has seen its value increase by over 500% in the past year, has made it a focal point for investors trying to identify key players in the AI value chain. The rapid ascent has sparked debate among fund managers and analysts over its high valuation, with some weighing the immense growth potential against the risks of a market bubble in AI-related stocks.
Wall Street remains broadly optimistic. The consensus analyst price target for Nebius sits at $156.40, suggesting further upside even after its recent rally. Investors are now looking ahead to the company's third-quarter financial results, scheduled for release on November 11, for signs that its explosive growth can be sustained. The upcoming report will be closely scrutinized to see if the company can continue to exceed lofty market expectations.