Microsoft has entered into a $19.4 billion agreement with Amsterdam-based supplier Nebius to secure AI cloud infrastructure amid rapidly growing demand for computing power. Nebius stated that it will begin delivering dedicated capacity to Microsoft from its new data center in Vineland, New Jersey, later this year. The company described this long-term contract as its first collaboration with a major technology firm and noted that the deal will help “accelerate AI cloud growth beyond 2026.” Investor Support Fuels Nebius’ Expansion Strategy Key backers of Nebius include Nvidia and Accel, providing the company with both industry credibility and financial strength. The $17.4 billion base contract with Microsoft, which could increase to $19.4 billion with additional services, is expected to reinforce this growth path. Proceeds from the agreement will support expansion, while the company also explores contract-backed debt and other financing options to drive faster growth. Nebius characterized the deal as a crucial milestone in its long-term strategy, demonstrating to investors that the company can compete for major contracts in the highly competitive AI cloud market. From Yandex Roots to Expanding U.S. Presence Nebius was established following Yandex’s spin-off of its Russian operations, with a focus on global AI infrastructure. The rebranding signifies a strategic shift from its origins in search and consumer internet toward enterprise-grade cloud computing. The Microsoft deal expands Nebius’ presence in the U.S., anchored by the new New Jersey facility and supported by offices in San Francisco, Dallas, and New York, which serve American AI developers and businesses. Capacity Constraints Drive Microsoft to External Providers Although Microsoft continues to invest record amounts into new data centers and servers, demand for AI workloads continues to outpace internal capacity. CFO Amy Hood told investors in July that the company expects to “continue facing capacity constraints through the end of the year.” To address this demand, Microsoft is increasingly relying on external partners. The company has already sourced additional GPU capacity from CoreWeave, and OpenAI, one of Azure’s largest customers, has signed its own multibillion-dollar agreement with CoreWeave to secure compute resources. The contract with Nebius adds another supplier to this portfolio, giving Microsoft assured access to new infrastructure to support both its own offerings and the growing demand for generative AI services from its customers. First Major Tech Agreement Sets Stage for Future Deals Arkady Volozh, founder and CEO of Nebius, stated that the Microsoft agreement marks the company’s first long-term contract with a major tech firm and predicted that “more will follow.” He described the deal as both financially attractive and a catalyst for expansion, enabling Nebius to pursue additional commitments from leading AI labs and enterprises. With Microsoft now on board, the partnership sets a new benchmark for Nebius in its efforts to secure more contracts within the AI cloud sector.