Nebius Tests $40 Billion Neocloud Spending Plan Amid Capacity Delays

Nebius is advancing an aggressive growth plan centered on massive AI data-center investment, but its third-quarter earnings reveal rising execution risks tied to project delays and a financing model dependent on customer commitments. On Thursday, the neocloud company said it plans to spend about $40 billion in 2027, well above Wall Street expectations. The company intends to fund the expansion largely through customer prepayments and debt secured by contracted revenue, meaning its financial strategy relies heavily on delivering data-center capacity on schedule. CEO Arkady Volozh acknowledged that delays are becoming a structural challenge for the industry and that Nebius is not immune. The company’s exposure is illustrated by its contract with Microsoft for AI computing capacity at a Vineland, New Jersey site operated by third-party provider DataOne. The agreement is valued at up to $19.4 billion, but delivery has slipped: only just over half of the contracted capacity is now expected by the end of the year, with the remainder pushed to the second quarter of 2027. Nebius attributed the delay to DataOne’s faster-than-expected wind-down of temporary power generation as the site transitions to Bloom Energy fuel cells. The Vineland facility has also drawn regulatory and local scrutiny. New Jersey regulators fined the site $1.1 million after reports identified dozens of unpermitted natural gas generators operating there, and nearby residents have filed a noise-complaint lawsuit. Under the Microsoft contract, the customer can terminate affected services after a grace period if delivery deadlines are missed and no alternative capacity is provided. Microsoft has not publicly canceled the deal, but reports indicate it is tightening oversight of neocloud partners and reevaluating new agreements amid third-party delays. Nebius argued that delays are concentrated in externally operated sites, while its own buildouts are proceeding on or ahead of schedule. The company reported $7.4 billion in cash and said prepayments plus asset-backed financing tied to investment-grade contracts could cover up to 85% of its projected 2027 capital spending. It forecast 2027 revenue of $12 billion to $13 billion and pre-tax breakeven by the fourth quarter. Still, investor confidence wavered. Nebius posted quarterly revenue of $981 million, up 571% from a year earlier, though roughly one-third came from a one-time payment linked to a new partnership model. The company reduced its 2026 revenue outlook by $200 million to $3 billion because of third-party site delays, and its shares fell 17% following the update. The episode underscores the fragility of the neocloud playbook, where rapid capital deployment, customer financing and on-time infrastructure delivery are tightly interdependent.