Microsoft Committed $7 Billion Upfront in Nebius AI Deal

Microsoft’s race to secure AI computing capacity has become so intense that the software giant agreed to commit nearly $7 billion in upfront payments to lock in GPU infrastructure from AI neocloud Nebius (NASDAQ: NBIS).

In an annual report filed on April 30, Nebius disclosed new details about its previously announced agreement with Microsoft, revealing a five-year contract carrying total committed payments estimated at up to $17.4 billion regardless of actual utilization of the GPU capacity.

The filing provides a rare look into the increasingly aggressive financial arrangements underpinning the AI infrastructure boom, where hyperscalers are effectively helping finance the construction of GPU clusters amid shortages of power, data center capacity and advanced chips.

Under the agreement signed in September 2025, Nebius will provide Microsoft with dedicated GPU cloud computing capacity at its new data center in Vineland, New Jersey. The deployment is being rolled out across nine tranches during 2025 and 2026.

Microsoft has committed to pay Nebius up to approximately $17.39 billion under the agreement, including aggregate upfront payments of roughly $6.96 billion. The remaining revenue will be invoiced monthly through October 2031.

The filing, however, suggests the upfront payments are tied to deployment milestones and service availability conditions rather than a single lump-sum payment made at signing.

Nebius stated that the payments are “subject to the satisfaction of deployment and availability” of the GPU services. The agreement also allows Microsoft to receive service credits or terminate individual tranches if Nebius misses delivery schedules or fails to meet uptime requirements.

The neocloud provider separately disclosed that, as of Dec. 31, 2025, it held approximately $275.5 million in current deferred revenue and another $1.302 billion in non-current deferred revenue. Deferred revenue typically reflects cash already received for services that have not yet been fully delivered or recognized as revenue.

While the filing does not explicitly attribute those balances to Microsoft or confirm that the full upfront commitment had already been paid by year-end, the figures suggest Nebius had already collected at least a substantial portion of customer prepayments tied to future GPU capacity deployments.

The combined deferred revenue balance of roughly $1.58 billion remains well below the total upfront commitment disclosed under the Microsoft agreement, indicating additional milestone-based payments may still be scheduled through subsequent deployment phases in 2026.

Nebius said cash flow from the Microsoft agreement would be used to finance part of the capital expenditures associated with the deployment. The company delivered the first tranche in November 2025 and the second in February 2026.