Nebius’s $40 Billion Spending Plan Faces Delivery and Financing Risks

Preface

Nebius has outlined an ambitious plan to spend $40 billion in 2027 as it expands its AI computing infrastructure. The neocloud company expects customer prepayments and financing backed by customer contracts to cover much of the cost. That approach can support rapid growth, but it depends on projects being completed and capacity becoming available when promised. Delays could increase expenses while postponing the revenue needed to support the investment.

The concern is already visible in New Jersey, where a data center serving Microsoft is months behind schedule. The project’s difficulties come as reports suggest Microsoft is scrutinizing third-party infrastructure projects more closely. This article examines the gap between Nebius’s growth ambitions and the practical risks of delivering large-scale data centers on time, as well as the company’s financial outlook and its dependence on major customers.

Lazy bag

Nebius plans to spend $40 billion in 2027, financing much of its data-center expansion with customer prepayments and loans backed by contracts. The strategy hinges on timely construction and delivery. A delayed New Jersey site serving Microsoft has pushed some planned capacity into Q2 2027, while Microsoft’s contract includes late-delivery penalties and termination provisions. Nebius says customer advances and asset-backed financing could cover up to 85% of planned 2027 capital spending, and forecasts revenue of $12 to $13 billion that year. Yet third-party delays have already contributed to a $200 million reduction in its 2026 revenue forecast.

Main Body

During its third-quarter earnings call on Thursday, Nebius announced plans for $40 billion in spending for 2027, a figure well above Wall Street’s expectations. The company’s plan reflects the scale of investment required to build data centers and provide computing capacity for artificial intelligence. It also puts a spotlight on execution: the proposed spending relies on a pipeline of projects, some of which have encountered delays.

Nebius intends to finance the buildout in significant part through customer prepayments and loans backed by customer contracts. In effect, it plans to use the expected value of future data-center services to help pay for the infrastructure needed to deliver them. This can provide capital before a facility begins generating revenue, but it also makes timely construction important. If projects are delayed or canceled, the company may continue to incur costs while the related revenue is pushed back.

Chief Executive Officer Arkady Volozh acknowledged the difficulty of delivering projects at this scale. “Building at this scale is hard, and delays are part of our industry right now,” he said during Thursday’s earnings call. “We are not immune.” His comments underline a risk facing infrastructure providers: construction timelines can be affected by factors outside a company’s direct control, even when customer demand and financing are in place.

The issue has become more consequential amid reports that Microsoft is cooling on neocloud agreements that fail to deliver capacity on time. Nebius is among the companies whose business depends on large customer contracts and infrastructure projects. If its capacity does not come online as scheduled, it could face accumulating costs and delayed revenue. Reports of closer oversight by Microsoft add uncertainty to the outlook for third-party data-center partnerships.

One of Nebius’s largest customers is Microsoft, which is paying for AI computing capacity at a data center in Vineland, New Jersey. The site is operated by DataOne, a third-party provider, and is now months behind schedule. Nebius’s contract with Microsoft is worth up to $19.4 billion. However, the delivery plan has changed: only just over half of the Microsoft capacity is now expected by the end of the year, while the remaining capacity is scheduled for Q2 2027.

Andrey Korolenko, Nebius’s chief product and infrastructure officer, attributed the delay to DataOne’s decision to “wind down the temporary generation faster than it was expected.” The site is transitioning to Bloom Energy fuel cells. The change in power arrangements has affected the schedule, illustrating how a data center’s delivery depends not only on construction but also on power generation and the readiness of supporting infrastructure.

The site’s power arrangements have also attracted regulatory scrutiny. In August, investigative site Floodlight identified at least 45 natural gas generators operating at the DataOne site, despite the facility not having received permits to operate gas generators. New Jersey regulators fined the facility $1.1 million, finding that the use of the generators violated federal law. Separately, DataOne faces a lawsuit from nearby residents over noise. The residents allege that the data center emits a constant humming sound.

These issues add context to the delay, although the company’s contract with Microsoft sets out provisions for missed dates. According to Nebius’s summary of the agreement, Microsoft can terminate affected services after a grace period if delivery dates are missed and no alternative capacity is offered. The relevant tranches were originally intended to be deployed in 2025 and 2026, meaning a Q2 2027 delivery would fall well outside the initial window. The contract also provides for financial penalties when delivery is late.

Nebius said Microsoft “has been part of the planning process.” The company did not say whether Microsoft had agreed to the revised delivery dates, and Microsoft had not publicly canceled anything at the time of the report. TechCrunch had reached out to Nebius, Microsoft, and DataOne for comment.

On the earnings call, Marc Boroditsky, Nebius’s chief revenue officer, said that the company’s agreements with Microsoft and Meta included significant prepayments, which arrived long before delivery. Such payments can help fund construction, but they do not eliminate the need to meet contractual obligations or complete projects. The timing difference between receiving cash and delivering capacity is therefore central to how the business model works.

Bloomberg reported last week that Microsoft was tightening oversight of third-party projects, including those run by Nebius, IREN, and Nscale, and was considering whether to sign additional agreements. Bloomberg also reported that Microsoft sent employees to the New Jersey site. In its own quarterly earnings report, Microsoft said its capital expenditure was lower than expected because of third-party delays. This suggests that delays can affect both infrastructure providers and the customers counting on their capacity.

Bloomberg further reported that Microsoft would not exercise an option to more than double its agreement with Nscale for a Texas data center. It also reported that Microsoft recently stopped being an anchor customer for Nscale’s planned Essex site after power delays. These reported decisions do not mean Microsoft has canceled its Nebius contract, but they demonstrate that the customer may reconsider planned commitments when projects do not progress as expected.

Nebius has argued that the delays are concentrated at sites it does not control. It says data centers it is building itself are coming online on time or ahead of schedule, and that these facilities will provide most of its new capacity from 2027. The distinction matters: a provider may be exposed to delivery risks not only through its own construction work, but also through third-party operators, power arrangements, and other dependencies.

Boroditsky said new deals signed in Q3 came with prepayments that more than cover the cost of the capacity being built for those customers. Nebius ended the quarter with $7.4 billion in cash. The company expects total prepayments, together with asset-backed financing of investment-grade contracts, to cover up to 85% of its $40 to $45 billion 2027 capital spending. Chief Financial Officer Maria Del Dado Alonso Sanchez identified Microsoft and Meta as contracts that could be financed this way. Boroditsky added that Nebius could “tap prepayments to shore up any additional cash requirements.”

These figures indicate that Nebius expects customers and contract-backed financing to provide a substantial portion of the funding for its expansion. At the same time, the projected coverage is not the same as eliminating financial risk. The company’s ability to draw on prepayments and loans depends on its contracts, the credit quality of those agreements, and the progress of the underlying projects. Delays could also alter when revenue arrives, even if a contract remains in force.

Nebius forecast 2027 revenue of $12 to $13 billion and said it expects to break even on a pre-tax basis by the fourth quarter. Those targets imply a significant expansion from its current scale. In the third quarter, the company reported revenue of $981 million, up 571% from a year earlier. Roughly a third of that revenue came from a one-time payment connected to a new partnership model, so the quarterly total includes a component that may not recur in the same way.

The company also reduced its 2026 revenue forecast by $200 million, bringing it to $3 billion. Nebius cited delays at third-party sites, including the New Jersey project. The revised outlook shows how execution issues can affect financial projections before the full scale of the planned 2027 investment is reached. Investors must assess both the company’s ability to secure financing and its ability to convert infrastructure spending into operational capacity and recurring revenue.

Nebius’s announcement therefore presents two connected stories. The first is the scale of its opportunity: demand for AI computing is driving large infrastructure commitments, and customer advances can help fund capacity. The second is the challenge of delivering that capacity on schedule, particularly when projects rely on outside operators and power systems. The New Jersey site highlights how technical, regulatory, and contractual factors can converge on a single project.

The market response was negative: Nebius shares ended the day down 17%. That reaction reflected concern about the gap between the company’s ambitious investment plan and the delivery risks affecting its projects. The central question is not only whether Nebius can raise the capital for its $40 billion plan, but whether it can build and deliver the capacity in time to meet customer expectations, support its revenue forecasts, and preserve the contract-backed financing on which its strategy depends.

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