1 of Jensen Huang's Favorite Artificial Intelligence (AI) Stocks Just Signed a Blockbuster Deal, and Investors Can't Get Enough of It

Nebius Group (NASDAQ: NBIS), an AI infrastructure company with a strategic investment from Nvidia (NASDAQ: NVDA), secured a multiyear deal with Microsoft valued at $17.4 billion to $19.4 billion through 2031 for data center capacity. This landmark agreement, which sent Nebius shares soaring nearly 50%, is projected to significantly boost its annual revenue run rate to approximately $2.9 billion from 2026, compared to an expected $0.9-$1.1 billion by year-end, highlighting the intensifying demand for specialized AI computing infrastructure.

Analysis

Nebius Group (NBIS) has secured a transformational multiyear agreement with Microsoft, valued between $17.4 billion and $19.4 billion through 2031, for AI-specific data center capacity. This deal is projected to generate approximately $2.9 billion in annual revenue for Nebius starting in 2026, a significant leap from its guided year-end 2024 annual revenue run rate of $900 million to $1.1 billion. The market's extremely positive reaction, evidenced by a nearly 50% surge in NBIS shares on September 10th, underscores the deal's perceived impact on future cash flows. The company, a spin-off from former Yandex assets now headquartered in Amsterdam, benefits from a strategic investment by Nvidia, which held approximately 1.2 million shares as of the second quarter. This backing, combined with its specialized data centers equipped with Nvidia GPUs, positions Nebius as a critical player in the AI infrastructure landscape, with its CEO signaling the potential for more large-scale deals in the future.

Key Decisions for Investors

• Investors should re-evaluate Nebius Group's valuation based on its newly secured long-term revenue stream, while monitoring execution risk associated with its new New Jersey data center and the materialization of further deals as guided by management.
• The magnitude of the Microsoft contract highlights the severe capacity constraints in AI computing, reinforcing the investment case for specialized data center operators and suggesting a continued focus on the entire AI supply chain for potential opportunities.
• For Nvidia shareholders, the success of its Nebius investment serves as a positive indicator of the firm's strategy to bolster the AI ecosystem, which in turn drives demand for its core GPU products and validates its capital allocation.