Nebius Group Relies Heavily on Microsoft and Meta for $40 Billion in Commitments

Nebius Group (NASDAQ:NBIS) has disclosed $40 billion in customer commitments, with a significant portion coming from just two major clients: Microsoft (NASDAQ:MSFT) and Meta Platforms (NASDAQ:META). The contracts with these tech giants total around $32 billion, with additional potential commitments reaching up to $17 billion. Microsoft's deal, signed in September 2025, involves $17.4 billion in dedicated capacity through 2031, potentially growing to $19.4 billion if extra services or capacity are purchased. Meta's commitments include a $3 billion contract in November 2025 and a $12 billion deal in March 2026, with an option for up to $15 billion more under specific conditions.

The concentration of revenue is notable, as only around 36% of Nebius' backlog is expected to convert into revenue within the next two years. Despite the heavy reliance on Microsoft and Meta, Nebius has seen some diversification, signing four second-quarter contracts with other AI model makers like Reflection and Cohere. However, the top three unnamed customers still accounted for 24%, 21%, and 14% of second-quarter revenue, highlighting the ongoing risk of customer concentration.

The contracts with Microsoft and Meta include provisions where the companies must pay for capacity regardless of usage, with upfront payments totaling around $7 billion from Microsoft. This financial commitment underscores the near-term risk tied to Nebius' execution capabilities. Meta's $12 billion deal, still under construction on Nvidia's next-generation Vera Rubin platform, includes discounted monthly fees for late delivery, adding another layer of complexity.

Nebius plans to spend $20 billion to $25 billion on capital expansion in 2026, relying heavily on the $40 billion in committed backlog to secure funding. With a current market valuation of about $64 billion, the stock price suggests expectations of many more high-value contracts in the future. However, analysts caution that the current valuation may be overestimating the likelihood of securing additional large deals, advising caution before investing heavily in Nebius stock.