Microsoft Bets $33 Billion on Neoclouds like Nebius to Ease AI Crunch

Core Insights - Microsoft Corp. has entered into a deal with neocloud company Nebius Group NV to enhance its computing power for developing large language models and a consumer AI assistant [1] - The deal is valued at up to $19.4 billion and includes access to over 100,000 Nvidia GB300 chips, which has positively impacted Nebius shares [2] - This partnership is part of a broader strategy to address AI data center capacity shortages and to optimize Microsoft's own server farms for AI services [3] Company Strategy - Microsoft has committed over $33 billion to various neocloud providers, indicating a strategic shift towards leveraging smaller infrastructure firms for essential computing resources [4] - The company is currently in a "land-grab mode" in the AI sector, aiming to eliminate constraints on capacity by renting server access from neoclouds [5] - The increasing demand for generative AI has strained data center infrastructure, prompting Microsoft to utilize neocloud facilities for internal and OpenAI projects [6] Operational Details - The first foundation AI models under consumer AI chief Mustafa Suleyman were trained at a CoreWeave data center, showcasing the collaboration with neocloud providers [7]