Microsoft commits $33B to secure 100K Nvidia chips from neocloud providers

Microsoft has committed $33 billion to partnerships with “neocloud” providers like Nebius, CoreWeave, and Lambda, securing access to over 100,000 of Nvidia’s newest GB300 chips without building additional infrastructure. This strategy allows Microsoft to rapidly scale its AI capabilities while reserving its own data centers for paying customers, revealing how tech giants are navigating the intense competition for scarce GPU resources.

What you should know: Microsoft’s $19.4 billion deal with Nebius, a specialized cloud computing provider, alone provides access to more than 100,000 Nvidia GB300 chips through temporary leasing arrangements.

• Each Nvidia GB300 NVL72 server rack contains 72 high-end B300 GPUs and costs approximately $3 million fully equipped.
• Nebius’s hardware allocation could exceed $4 billion in value, representing a significant portion of the overall partnership.
• The arrangement gives Microsoft immediate access to cutting-edge computing power without waiting for its own facilities to come online.

The bigger strategy: Microsoft is spreading AI workloads across smaller, specialized compute networks rather than relying solely on its own infrastructure.

• Neocloud providers act as intermediaries, renting GPU clusters to major clients like OpenAI and Microsoft.
• This approach allows Microsoft to position its internal data center infrastructure as a commercial service for paying clients.
• The company has generated billions by renting computing power and aims to increase revenue to justify expanding AI data center budgets.

Infrastructure expansion: Microsoft is simultaneously investing heavily in its physical footprint with massive new facilities.

• The upcoming 315-acre data center complex in Mount Pleasant, Wisconsin, will host hundreds of thousands of Nvidia GPUs.
• The facility will include enough fiber optic cable to “wrap around the earth 4.5 times.”
• Designed with a self-sustaining power supply, it signals an attempt to reduce dependency on external providers long-term.

Market pressures: The rapid GPU buildout is straining energy systems and raising regulatory concerns.

• Wholesale power prices near major AI facilities have risen 267% over five years.
• New projects in Tennessee and Wyoming are linked to rising emissions and energy use.
• Environmental impacts are drawing increased attention from residents and regulators.

Competitive dynamics: Microsoft’s deep ties to both Nvidia and OpenAI place it at the center of growing antitrust scrutiny.

• Nvidia’s $100 billion investment in OpenAI has intensified questions about market concentration.
• The pursuit of computational scale continues to blur lines between partnership and dominance in the AI ecosystem.
• Microsoft’s strategy reveals how companies are managing massive AI demand while navigating supply constraints.