Nebius bets up to $45 billion on 2027 AI buildout as Microsoft deal slips

Nebius commits up to $45 billion to 2027

Nebius used its third-quarter earnings call to lay out plans for $40 billion to $45 billion in capital spending in 2027, a figure that TechCrunch reports came in far above what Wall Street expected. The neocloud provider intends to fund up to 85% of that outlay through customer prepayments and loans backed by customer contracts — in effect borrowing against the future value of data centers that have not been built yet.

CEO Arkady Volozh was blunt about the risk. "Building at this scale is hard, and delays are part of our industry right now," he said on the call. "We are not immune."

The Microsoft deal is running late

Nebius's largest known commitment is a contract with Microsoft worth up to $19.4 billion for AI computing capacity at a Vineland, New Jersey data center. That site, run by third-party operator DataOne, is months behind schedule. According to TechCrunch, only just over half of the Microsoft capacity is now planned for delivery by the end of this year, with the rest pushed to the second quarter of 2027 — well beyond the original 2025 and 2026 deployment window.

Chief product and infrastructure officer Andrey Korolenko attributed the delay to DataOne winding down temporary power generation faster than expected as the site switches to Bloom Energy fuel cells. That switch was not entirely voluntary: in August, the investigative outlet Floodlight found at least 45 natural gas generators running at the site without permits, and New Jersey regulators fined DataOne $1.1 million after finding the generators violated federal law. The facility also faces a noise-complaint lawsuit from nearby residents over a constant hum.

The contract terms add pressure. Per Nebius's own summary of the deal, Microsoft can terminate affected service after a grace period if deadlines are missed and no alternative capacity is offered, and the agreement carries financial penalties for late delivery. Nebius said Microsoft "has been part of the planning process," but TechCrunch notes the company did not say whether Microsoft agreed to the new dates. Microsoft has not publicly canceled anything.

A buildout financed by customers

The financing model is the crux of the announcement. Chief revenue officer Marc Boroditsky said the Microsoft and Meta deals both carried significant prepayments that arrived long before delivery, and that deals signed in the third quarter came with prepayments exceeding the cost of building the capacity behind them. CFO Maria Del Dado Alonso Sanchez named Microsoft and Meta as contracts that qualify for prepayment-plus-asset-backed financing, and Boroditsky said prepayments could cover any additional cash needs. Nebius ended the quarter with $7.4 billion in cash.

The model only works if capacity arrives on time. Delays mean costs keep piling up while revenue slips, which is precisely the scenario now playing out in New Jersey. Nebius argues the problem is confined to sites it does not control, saying data centers it builds itself are on schedule or ahead of it and will supply most of its new capacity from 2027 onward.

Microsoft is tightening the screws

The timing is awkward because Microsoft appears to be losing patience with third-party builders. Bloomberg, as cited by TechCrunch, reported that Microsoft is tightening oversight of projects run by Nebius, IREN and Nscale, debating whether to sign new agreements, and has sent its own employees to the New Jersey site. Microsoft's quarterly report also attributed lower-than-expected capex to third-party delays.

Bloomberg further reported that Microsoft declined an option to more than double its Nscale agreement for a Texas data center and dropped anchor-customer status for Nscale's planned Essex site after power delays — signs that the hyperscaler will walk away when partners miss their marks.

The quarterly numbers

Nebius reported third-quarter revenue of $981 million, up 571% year over year, though roughly a third of that came from a one-time payment tied to a new partnership model. The company cut its 2026 revenue forecast by $200 million to $3 billion, citing delays at third-party sites such as New Jersey. For 2027, it projects revenue of $12 billion to $13 billion and expects to reach pre-tax breakeven by the fourth quarter. Investors were unconvinced: shares closed down 17% on the day.

Why it matters

Nebius is running the most aggressive test yet of the neocloud playbook: funding a massive GPU buildout with hyperscaler money and contract-backed debt rather than shareholder equity. If deliveries land on time, the model scales the company into a serious AI infrastructure player at modest dilution. If permitting fights, power delays and customer walkaways multiply, the whole financing structure becomes fragile — and not just for Nebius. Microsoft's reported retrenchment with IREN and Nscale suggests hyperscalers are already turning more selective, which could constrain how the next wave of AI compute gets financed across the industry.