2025-09-09
After Nebius signed a landmark AI infrastructure deal with Microsoft, valued between $17.4 billion and $19.4 billion over five years, NBIS stock soared, jumping 40–60% in after-hours trading.
The deal reduces near-term risk for Nebius and validates its "neocloud" business model, but whether NBIS is a buy today depends on your investment horizon.
Short-term traders see immense upside from momentum. Long-term investors, however, should wait to see how Nebius diversifies its customer base and executes its ambitious growth plans.
1. Deal Details
Nebius will provide Microsoft with GPU-driven AI infrastructure beginning in late 2025, centred around its new data centre in Vineland, NJ. The contract lasts for five years, starting at $17.4 billion and potentially increasing to $19.4 billion depending on demand. [1]
2. Investor Reaction
The market response was immediate. NBIS stock surged over 40% in after-hours trading, reflecting investor excitement and a wave of retail-driven hype.
3. Strategic Significance
Analysts describe this deal as a game-changer. For Nebius, it means predictable revenue streams, operational scale, and external validation of its role in the rapidly expanding AI infrastructure industry.
Nebius is currently in direct competition with CoreWeave, Lambda Labs, and Nvidia-supported hyperscale enterprises, all vying for a share of the AI cloud market. While Nebius is smaller, the Microsoft partnership puts it firmly on the map.
Unlike Nvidia, which benefits from selling GPUs to all hyperscalers, Nebius is more narrowly exposed, making customer diversification critical.
Immediate Momentum Drivers
Retail & Soft hype fueling massive spikes.
Short-covering is likely amplifying the rise.
Media buzz reinforces momentum.
Key risk: These dynamics often reverse quickly once the initial euphoria fades.
Longer-Term Realism
Long-term investors must see:
Execution: successful deployment of infrastructure on time and on budget.
Expansion of client portfolio beyond Microsoft.
Sound financial health, with transparent debt and financing strategy.
As of September 2025, Goldman Sachs initiated coverage with a Buy rating and a price target of $147, calling the deal a turning point.
TipRanks sentiment (September 2025): Neutral, with an average target near $70, below post-rally trading levels. [2]
Some analysts caution that NBIS is overvalued in the short term, given its dependence on Microsoft.
Catalysts to Watch
Q4 earnings as the Microsoft deployment begins.
Updates on Nebius' execution and financing plans.
Any new hyperscaler clients or geographic expansion.
Risks & Red Flags
1) Customer Concentration
Microsoft currently represents the majority of projected revenue.
2) Execution Risk
Delays in GPU supply chains or construction could derail timelines.
3) Financing Burden
Heavy debt-funded growth may compress margins.
4) Regulatory Scrutiny
Contracts for AI infrastructure could draw U.S. scrutiny.
5) High Volatility
Hype-driven moves can unwind violently.
Nebius's stock jumped between 40% to 60% in after-hours trading following a massive AI infrastructure deal with Microsoft, valued at $17.4 billion over five years, potentially rising to $19.4 billion depending on demand.
In Q2 2025, Nebius posted a 625% year-over-year revenue increase to $105.1 million, raised its annual run rate guidance to $900 million–$1.1 billion, and saw its stock gain 145% year-to-date. [3]
Goldman Sachs recently initiated coverage with a "Buy" rating, while analysts on MarketScreener reflect a consensus average price target of $89.40, which is about 40% above its last close of $64.06. This indicates ongoing bullish sentiment despite the volatility in pricing.
In conclusion, the Microsoft agreement propelled Nebius into prominence and provided strong confirmation of its business strategy. For short-term traders, NBIS presents a high-volatility chance with significant potential for gains.
For long-term investors, patience is essential: the upcoming 12 to 18 months will show if Nebius can transform from a partner reliant on Microsoft into a diversified leader in AI infrastructure.
Until then, NBIS remains a high-risk, high-reward stock, a speculative play in a rapidly changing market.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
[1] https://www.bloomberg.com/news/articles/2025-09-08/microsoft-signs-nebius-cloud-deal-for-as-much-as-19-4-billion
[2] https://www.tipranks.com/news/microsoft-strikes-20b-ai-cloud-deal-with-nebius
[3] https://www.reuters.com/business/nebius-signs-174-billion-ai-infrastructure-deal-with-microsoft-shares-jump-2025-09-08/
