Nebius announced plans to spend $40 billion by 2027 to expand its neocloud infrastructure, a figure significantly higher than previous Wall Street expectations. The company intends to fund this expansion through a combination of customer prepayments and loans backed by customer contracts, aiming to use the future value of data centers to finance their construction. Nebius expects prepayments and asset-backed financing to cover up to 85% of the projected $40 billion to $45 billion capital expenditure.
The ambitious expansion faces challenges at a major site in Vineland, New Jersey, where a contract with Microsoft worth up to $19.4 billion is facing significant delays. While the capacity was originally intended for deployment in 2025 and 2026, only about half of the Microsoft capacity is now scheduled for delivery by the end of this year, with the remainder expected in Q2 2027. Nebius attributed the delay to the third-party operator of the site, DataOne, which decided to wind down temporary power generation faster than expected during a transition to Bloom Energy fuel cells.
DataOne is currently facing regulatory and legal scrutiny regarding the New Jersey site. New Jersey regulators fined the facility $1.1 million after finding that the use of at least 45 natural gas generators violated federal law. Additionally, the site is the subject of a noise-complaint lawsuit from local residents. Nebius stated that the delays are occurring at sites it does not control, noting that its own self-built data centers are coming online on time or ahead of schedule.
“Building at this scale is hard, and delays are part of our industry right now,” CEO Arkady Volozh said during the company's third-quarter earnings call.
The delays come as reports from Bloomberg suggest Microsoft is tightening oversight on neocloud deals that fail to deliver on time. Microsoft recently reported that its own capital expenditure was lower than expected due to third-party delays and has reportedly pulled back from other agreements with providers like Nscale. While Nebius noted that Microsoft has been part of the planning process, the company did not confirm if Microsoft has agreed to the revised delivery dates, which include financial penalties for late delivery.
Nebius reported third-quarter revenue of $981 million, a 571% increase from the previous year. However, the company cut its 2026 revenue forecast by $200 million to $3 billion, citing the delays at third-party sites. Nebius expects to break even on a pre-tax basis by the fourth quarter and forecasts 2027 revenue between $12 billion and $13 billion.
