Nebius announced $40 billion in planned spending for 2027 during its third-quarter earnings call on Thursday, a figure that far exceeds Wall Street expectations.
The plan relies on customer pre-payments and loans backed by future contracts to fund construction. This strategy becomes risky if projects face delays or cancellations.
“Building at this scale is hard, and delays are part of our industry right now,” CEO Arkady Volozh said during the call. “We are not immune.”
The announcement follows reports that Microsoft is cooling on neocloud deals that miss delivery targets. For Nebius, whose financing depends on repayments, this is a problem. If capacity is not delivered on time, costs continue to rise while revenues slip.
Microsoft is one of Nebius’s largest customers. It pays for AI computing capacity at a Vineland, New Jersey data center that is months behind schedule. The contract is worth up to $19.4 billion but deadlines are already slipping. Only just over half of the capacity is planned for delivery by year-end, with the remainder arriving in Q2 2027.
The delay stems from DataOne, the third party operator of the site. Andrey Korolenko, chief product and infrastructure officer, said DataOne “decided to wind down the temporary generation faster than it was expected” as the site switches to Bloom Energy fuel cells.
That transition was not entirely voluntary. In August, the investigative site Floodlight identified at least 45 natural gas generators operating at the DataOne site, even though no permits for such generators had been received. New Jersey regulators fined the facility $1.1 million, ruling the use of the generators violated federal law.
DataOne also faces a noise-complaint lawsuit from nearby residents over a constant humming noise allegedly emitted by the data center.
Nebius’s summary of the Microsoft contract states Microsoft can terminate affected service after a grace period if dates are missed and no alternative capacity is offered. The tranches were originally meant for 2025 and 2026, so a Q2 2027 delivery falls beyond that window. The contract includes financial penalties for late delivery.
Nebius said Microsoft “has been part of the planning process.” It did not state whether Microsoft agreed to the new dates, though Microsoft has not publicly canceled anything.
TechCrunch has reached out to Nebius, Microsoft, and DataOne for comment.
Marc Boroditsky, Nebius’s chief revenue officer, noted that deals with Microsoft and Meta included significant prepayments arriving long before delivery. However, Bloomberg reported last week that Microsoft is tightening oversight on projects run by third parties, including Nebius, IREN, and Nscale, and debating whether new agreements are worth signing. Microsoft also sent employees to the New Jersey site, per Bloomberg.
In its own quarterly earnings report, Microsoft noted capex spend was lower than expected due to third-party delays. The company is clearly not above pulling back from planned agreements where partners fail to meet their share of the bargain. Bloomberg also reported Microsoft would not use 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 delays come from sites it does not control. Data centers it builds itself are coming online on time or ahead of schedule. Those sites will supply most new capacity from 2027. Boroditsky said new deals signed in Q3 came with prepayments covering the cost of building 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 the $40 to $45 billion 2027 capex spend. CFO Maria Del Dado Alonso Sanchez named Microsoft and Meta as contracts that can be financed this way. Boroditsky also said Nebius could “tap prepayments to shore up any additional cash requirements.”
Nebius forecast 2027 revenue of $12 to $13 billion and expects to break even on a pre-tax basis by the fourth quarter.
Nebius reported third-quarter revenue of $981 million, up 571% from a year earlier. Roughly a third of that 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 to third-party sites like New Jersey. Shares ended the day down 17%.
What it means
Customers relying on Nebius for infrastructure face the risk that promised capacity will not arrive when needed. Microsoft is already testing the limits of these agreements. For Nebius, the financial model depends on getting sites operational quickly enough to honour prepayments and avoid penalties.
