Nebius used its third-quarter earnings call to outline $40 billion in planned spending for 2027, a scale far above what Wall Street had expected. The neocloud company is trying to turn demand for AI computing into a large data-center buildout, but the plan rests on projects that are already showing strain. Nebius intends to finance construction with customer prepayments and loans backed by customer contracts, effectively using the future value of its data centers to pay for building them. That strategy becomes riskier if projects are delayed or canceled, because costs can accumulate while revenue slips.
CEO Arkady Volozh acknowledged the pressure. He said building at this scale is hard, that delays are part of the industry right now, and that Nebius is not immune. The results arrived after reports that Microsoft is cooling on neocloud deals that are not delivered on time, a concern for a company whose financing depends more on repayments as it expands.
The New Jersey bottleneck
One of Nebius’ largest customers is Microsoft, which is buying AI computing capacity at a delayed data center in Vineland, New Jersey. The agreement is worth up to $19.4 billion. Just over half of the capacity is now due by the end of 2026, with the remainder scheduled for the second quarter of 2027.
Andrey Korolenko, Nebius’ chief product and infrastructure officer, said the delay stems from DataOne, the third-party operator of the site, winding down temporary generation faster than expected as the facility switches to Bloom Energy fuel cells. The transition was not entirely voluntary. In August, an investigative report identified at least 45 natural gas generators operating at the DataOne site even though it had not received permits for operating gas generators. New Jersey regulators fined the DataOne facility $1.1 million, finding that use of the generators violated federal law. DataOne also faces a noise-complaint lawsuit from nearby residents over an allegedly constant humming noise from the data center.
Under Nebius’ summary of the Microsoft contract, Microsoft can terminate affected service after a grace period if dates are missed and no alternative capacity is offered. The tranches were originally meant to be deployed in 2025 and 2026, so a second-quarter 2027 delivery date falls well beyond that window. The contract also includes financial penalties for late delivery. Nebius said Microsoft has been part of the planning process. Nebius did not say whether Microsoft has agreed to the new dates; Microsoft has not publicly canceled anything.
Prepayments and contract-backed debt
On the call, Chief Revenue Officer Marc Boroditsky said Nebius’ deals with Microsoft and Meta both came with significant prepayments, received long before delivery. But reports last week said Microsoft is tightening oversight of projects run by third parties, including Nebius, IREN and Nscale, and debating whether new agreements are worthwhile. Microsoft also sent employees to the New Jersey site, according to those reports. In its own quarterly earnings, Microsoft said capital spending was lower than expected because of third-party delays. Reports also said Microsoft would not exercise an option to more than double its Nscale agreement for a Texas data center and recently stopped being an anchor customer for Nscale’s planned Essex site after power delays.
Nebius says its delays are coming from sites it does not control, while data centers it is building itself are coming online on time or ahead of schedule. Those self-built sites, Nebius says, will supply most of its new capacity from 2027. Boroditsky said new deals signed in the third quarter came with prepayments that more than cover the cost of building the capacity behind them. Nebius ended the quarter with $7.4 billion in cash. Total prepayments plus asset-backed financing of investment-grade contracts are expected to cover up to 85% of its $40 billion to $45 billion in 2027 capital spending. CFO Maria Del Dado Alonso Sanchez named Microsoft and Meta as contracts that can be financed this way. Boroditsky said Nebius could also tap prepayments to shore up any additional cash requirements.
Forecasts and the market’s response
Nebius forecast 2027 revenue of $12 billion to $13 billion and said it expects to break even on a pre-tax basis by the fourth quarter. It reported third-quarter revenue of $981 million, up 571% from a year earlier. Roughly a third of that revenue was a one-time payment tied to a new partnership model. Nebius cut its 2026 revenue forecast by $200 million to $3 billion, citing delays at third-party sites such as the New Jersey facility. Shares ended the day down 17%.