Quick overview

---

Microsoft’s agreement with neocloud startup Nebius Group will provide internal teams working on large language models and a consumer AI assistant access to processing power. When it was announced in September, the deal, which could be worth up to $193.4 billion, caused Nebius’s stock to rise by double-digit percentages in less than a month

Nebius’s stock has not yet been fully priced into the deal, suggesting that related partners like Microsoft could benefit. Citing the deal’s transformative potential, Northland increased its price target for Nebius from $77 to $206, which may subtly increase trust in Microsoft’s cloud strategy.

The transaction strengthens Microsoft’s dominance in cloud and AI, which adds to its optimistic outlook, even though it hasn’t been directly connected to a significant increase in MSFT’s stock price. As of September 30, 2025, the stock has gained 6.92 percent in the last month, indicating consistent growth that may have aided these strategic alliances.

MSFT is valued at a premium with a forward P/E ratio of 33.3x, which is higher than its historical average. Short-term AI investments raise depreciation costs, which affects margins, according to some analysts. Nonetheless, it is anticipated that long-term AI monetization will propel earnings growth. Morgan Stanley recently upgraded its target from $582 to $625.