(Bloomberg) — Microsoft Corp.’s deal with neocloud company Nebius Group NV will provide computing power to internal teams creating large language models and a consumer AI assistant, according to people familiar with the situation.
The arrangement, which is worth as much as $19.4 billion, sparked a rally in Nebius shares when it was outlined Sept. 8, but the announcement was short on specifics. As part of the deal, Microsoft will get access to more than 100,000 of Nvidia Corp.’s latest GB300 chips, said the people, who requested anonymity to discuss an internal matter.
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The strategy is aimed at coping with a shortage of AI data center capacity and letting Microsoft free up its own server farms to provide lucrative AI services to customers.
This is just one of a string of deals Microsoft has struck with so-called neoclouds — a new category of small infrastructure providers that lease out AI-focused computing power. Microsoft has inked more than $33 billion in commitments to such providers, including Nebius, CoreWeave Inc., Nscale and Lambda. The deals demonstrate the company’s growing willingness to use relative newcomers for important infrastructure.
Cloud vendors have generally operated their own data centers, but Microsoft is struggling to bring sufficient computing capacity online. Renting access to servers from neoclouds speeds things up since they have already solved logistical challenges including obtaining sufficient power and chips.
“We are in very much land-grab mode in the AI space,” said Scott Guthrie, who leads Microsoft’s cloud efforts. “We’ve made the decision that we don’t want to be constrained in terms of capacity.”
Nebius shares were up about 5.5% at 10:17 a.m. in New York, while Microsoft was mostly unchanged. Nebius and the other neocloud firms declined to comment.
The advent of power-guzzling generative AI has put enormous strain on data center infrastructure. So Microsoft is freeing up capacity in its own data centers for cloud clients by running some computing for internal and OpenAI work at neocloud facilities, Guthrie said.
For example, the first foundation AI models built under consumer AI chief Mustafa Suleyman were trained at a CoreWeave data center near Portland, Oregon, according to people familiar with the work.
(Bloomberg) — Microsoft Corp.’s deal with neocloud company Nebius Group NV will provide computing power to internal teams creating large language models and a consumer AI assistant, according to people familiar with the situation.
The arrangement, which is worth as much as $19.4 billion, sparked a rally in Nebius shares when it was outlined Sept. 8, but the announcement was short on specifics. As part of the deal, Microsoft will get access to more than 100,000 of Nvidia Corp.’s latest GB300 chips, said the people, who requested anonymity to discuss an internal matter.
Most Read from Bloomberg
The strategy is aimed at coping with a shortage of AI data center capacity and letting Microsoft free up its own server farms to provide lucrative AI services to customers.
This is just one of a string of deals Microsoft has struck with so-called neoclouds — a new category of small infrastructure providers that lease out AI-focused computing power. Microsoft has inked more than $33 billion in commitments to such providers, including Nebius, CoreWeave Inc., Nscale and Lambda. The deals demonstrate the company’s growing willingness to use relative newcomers for important infrastructure.
Cloud vendors have generally operated their own data centers, but Microsoft is struggling to bring sufficient computing capacity online. Renting access to servers from neoclouds speeds things up since they have already solved logistical challenges including obtaining sufficient power and chips.
“We are in very much land-grab mode in the AI space,” said Scott Guthrie, who leads Microsoft’s cloud efforts. “We’ve made the decision that we don’t want to be constrained in terms of capacity.”
Nebius shares were up about 5.5% at 10:17 a.m. in New York, while Microsoft was mostly unchanged. Nebius and the other neocloud firms declined to comment.
The advent of power-guzzling generative AI has put enormous strain on data center infrastructure. So Microsoft is freeing up capacity in its own data centers for cloud clients by running some computing for internal and OpenAI work at neocloud facilities, Guthrie said.
For example, the first foundation AI models built under consumer AI chief Mustafa Suleyman were trained at a CoreWeave data center near Portland, Oregon, according to people familiar with the work.
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