Nvidia-backed AI firm Nebius to raise $3b after Microsoft deal

Nebius Group NV plans to raise US$3 billion through a mix of convertible notes and new equity to support its expansion, following its recent agreement to provide AI infrastructure to Microsoft.

The Amsterdam-based AI cloud provider will issue US$2 billion in convertible notes—US$1 billion due in 2030 and the rest in 2032—and US$1 billion in new shares.

The funds will be used to acquire more computing power and hardware, including capacity for a new data center in Vineland, New Jersey, dedicated to Microsoft.

The company said that debt secured by the Microsoft contract will help fund related spending.

The deal is expected to bring Nebius at least US$17.4 billion through 2031, with options that could raise the total to US$19.4 billion.

Nebius split from Russian internet company Yandex in 2024 and primarily supplies AI infrastructure to startups and smaller firms. It reported US$117.5 million in sales last year.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

AI infrastructure demand creates unprecedented value acceleration for specialized providers

Nebius exemplifies how AI infrastructure companies are experiencing dramatic value multipliers that significantly exceed their traditional revenue bases.
The company reported just $117.5 million in sales last year, yet secured a Microsoft deal worth at least $17.4 billion through 2031—representing a 148x multiple of annual revenue 1.
This trend reflects across the sector, with rival CoreWeave reporting 420% year-over-year revenue growth while Nebius posted 385% growth, demonstrating the strong demand for AI computing resources 2.
The market response reinforces this value creation, with Nebius stock surging nearly 50% immediately following the Microsoft deal announcement 3.
These individual success stories align with broader industry projections showing annual AI infrastructure spending reaching $320 billion by 2025, up from much smaller bases just years earlier 4.

Alternative financing models dominate AI infrastructure expansion over traditional debt

Nebius’s financing strategy reflects an industry-wide shift toward hybrid financing structures rather than conventional bank loans or public bonds.
The company is raising $2 billion through convertible notes and $1 billion in equity, using debt secured specifically against the Microsoft contract rather than general corporate borrowing 1.
This mirrors Meta’s approach, which secured a $29 billion hybrid debt-equity financing deal with private credit firms PIMCO and Blue Owl for AI infrastructure expansion 5.
Private credit is projected to contribute over $800 billion to the estimated $3 trillion needed for AI infrastructure by 2028, with the U.S. data center financing market alone expected to reach $60 billion in 2025 6, 5.
These alternative structures offer the flexibility and customized terms needed for AI projects with uncertain cash flows and long development periods, explaining their rapid adoption over traditional financing methods.