What was that name again?
Nebius Group (NBIS) might not have the brand awareness that other tech outfits have, but that could be changing as the AI cloud infrastructure company steps out into the spotlight.
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Nebius, which counts AI-chip bulldozer Nvidia (NVDA) as a backer, provides a cloud platform built for intensive AI workloads.
As a so-called neocloud, the company builds and operates data centers containing large clusters of high-performance Nvidia graphics-processing units, which it then rents out to customers.
Nebius designs its own servers and works directly with manufacturers, enabling it to optimize performance and costs.
The Amsterdam company was formed after its founder, Arkady Volozh, divested the international business from the Russian tech giant Yandex following Russia’s invasion of Ukraine.
Nebius
The company retained several businesses that operated outside Russia and refocused its strategy on AI.
Nebius, in case you were wondering, is a portmanteau, combining “nebula,” meaning “cloud” in Latin, with the infinite nature of a Möbius strip.
The company recently made some noise on Wall Street: It unveiled a $17.4 billion agreement to deliver AI infrastructure to software giant Microsoft (MSFT) .
TheStreet Pro trader: Companies are demanding more resources
The five-year agreement will see Nebius supplying dedicated AI computing capacity from a new data center in Vineland, N.J., starting later this year.
The total contract value could grow to $19.4 billion if Microsoft layers in more capacity, according to a Form 6-K filed with the Securities and Exchange Commission.
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Nebius’s stock soared over 50% and Volozh said that Nebius’s core AI cloud business, serving customers from AI startups to enterprises, “is performing exceptionally well.”
“We have also said that in addition to our core business, we expect to secure significant long-term committed contracts with leading AI labs and big tech companies,” he said in a statement.
The deal will “help us to accelerate the growth of our AI cloud business even further in 2026 and beyond.”
Nebius shares have more than tripled (up 244%) this year and have risen 567% from this time in 2024.
“The sure winners in a booming industry like artificial intelligence aren’t the companies that are developing AI applications but those that provide those leaders with essential tools, services and infrastructure,” TheStreet Pro’s James “Rev Shark” DePorre wrote.
“This theory is often referred to as a ‘picks and shovels’ approach to the market and originates from the California Gold Rush, when merchants selling picks, shovels, and supplies to gold miners were the most consistently profitable,” he added.
While Microsoft may not be a big winner in AI, DePorre, CEO of Hammerhead Strategies, said Nebius was “a pretty sure bet to do well by providing Microsoft with the essential tools it needs.”
He said that one of the most interesting aspects of the deal was that the size and scope indicated that it was fairly early in the game.
“Major companies such as Microsoft are still demanding more resources and paying a substantial amount for them,” he said.
Data construction spending hits all-time high
On the heels of the Microsoft deal, Nebius said it would raise $3 billion to fuel growth in its core AI cloud business. The financing includes a $2 billion private offering of convertible senior notes and a $1 billion underwritten public offering of Class A shares.
“Our core AI cloud business is growing rapidly, and we continue to be laser-focused on developing this business,” the company said. “We view long-term contracts such as the one we announced this week with Microsoft as important incremental sources of growth.”
Nebius said it would use the funds to acquire additional computing power and hardware, secure strategic high-quality and well-located land plots with reliable providers, expand its data center footprint, and for general corporate purposes.
Investors should be aware: Nebius is in a sharply competitive business.
“For our core AI infrastructure business, our key competitors are specialized cloud service providers focused on AI, including CoreWeave (CRWV) , Crusoe and Lambda,” Nebius’s SEC Form 20-F says. “We also compete with general purpose cloud computing including” Amazon Web Services (AMZN) , Google Cloud Platform (GOOGL) , Microsoft Azure and Oracle (ORCL) .
The company reported that it swung to first-half net income of $470.9 million from a net loss of $414 million in the year-earlier period. On an adjusted basis, excluding special items, Nebius’s six-month net loss widened to $175.2 million from $127.2 million. Revenue reached $156 million from $24.2 million.
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Construction spending on U.S. data centers at a seasonally adjusted annual rate reached an all-time high of $40 billion in June as technology giants continued to pour billions into AI infrastructure, Reuters reported, citing a Bank of America Institute report.
The figure marks a 30% increase from the year-earlier period, which saw a 50% surge.
The consulting firm McKinsey said in an April report that “amid the AI boom, compute power is emerging as one of this decade’s most critical resources.”
“In data centers across the globe, millions of servers run 24/7 to process the foundation models and machine learning applications that underpin AI,” the firm said.
“The hardware, processors, memory, storage and energy needed to operate these data centers are collectively known as compute power — and there is an unquenchable need for more.”
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