Microsoft has invested $33 billion into "neocloud" datacenter providers to date, with its latest deal with Nebius significantly raising this dollar amount. The $19.4 billion agreement currently being finalized with Nebius will secure for Microsoft approximately 100,000 Nvidia GPUs to be used by Microsoft's internal teams.
According to sources close to the deal, Microsoft has access to "more than 100,000 of Nvidia's latest GB300 chips." The deal likely refers to Nvidia's GB300 NVL72 server racks, which contain 72 B300 GPUs each; if this reading is accurate, Microsoft has secured the use of somewhere in the ballpark of 1,400 of Nvidia's newest server racks. At an estimated $3 million price tag per fully-equipped rack, this nearly $20 billion deal would instantly pay off the price tag for each of these GB300s ($4.2 billion), and then some.
Microsoft reportedly made the deal to use Nebius's data center facilities for its own internal teams working on "creating large language models and a consumer AI assistant". These teams likely refer to Microsoft's CoreAI, the team behind Copilot+, GitHub Copilot, and all the other flavors of Copilot that Microsoft is developing.
Microsoft's own internal data center infrastructure, one of the largest among hyperscalers, has been reserved primarily for renting out to new clients. Microsoft has generated billions by selling its data center services to users and aims to increase these sales to demonstrate to investors that its substantial investments in AI data centers are worthwhile.
The other $13 billion in CapEx Microsoft has devoted to neocloud providers has gone to companies including CoreWeave, Nscale, and Lambda. CoreWeave is among the most notable of these names, being one of the first major firms to pivot from cryptomining operation rentals to serving AI data center hyperscalers. CoreWeave is known for consistently being the first customer to receive Nvidia's latest and greatest server racks, and has recently also been striking 11-figure deals with hyperscalers like OpenAI. The company is now planning a $6 billion investment in a new 100 MW data center in Pennsylvania, much to the chagrin of the state's governor.
Microsoft isn't soon to be outspent by its compute providers, however. Just last month, Microsoft announced its plans to construct a 315-acre data center in Mount Pleasant, Wisconsin, holding hundreds of thousands of Nvidia GPUs, enough fiber to "wrap around the earth 4.5 times", and an entirely self-sustaining power supply.
That last clause is excellent news for Wisconsin residents, as the costs of building out all of the new AI data centers worldwide have begun affecting average residents of the United States. Wholesale energy prices around AI data centers have grown 267% in the last five years, pricing homeowners out of their own electricity usage. xAI's Colossus data center is spewing harmful pollution into the air of Tennessee residents, and a new mystery data center now being built in Wyoming threatens to use 5x the power of all humans living in the state.
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