Nebius just told Wall Street it plans to spend $40 billion on infrastructure in 2027. That’s far more than analysts expected. According to TechCrunch AI, the neocloud company laid out the plan on its third-quarter earnings call Thursday. On the same call it admitted that a key data center built for Microsoft is months behind schedule. Shares closed down 17%.
The Quick Version
- The spend: $40 to $45 billion in 2027 capex, much higher than Wall Street’s forecast.
- The funding: Customer prepayments plus loans backed by customer contracts are expected to cover up to 85% of it.
- The problem: Nebius is up to $19.4 billion into its Microsoft contract, and the New Jersey site behind it is running late.
- The cut: Nebius lowered its 2026 revenue forecast by $200 million, to $3 billion.
- The upside: It’s guiding to $12 to $13 billion in 2027 revenue and expects to break even on a pre-tax basis by the fourth quarter.
How the Neocloud Playbook Works
Neoclouds are GPU-focused cloud providers that rent AI computing power to hyperscalers and AI labs. Nebius, IREN and Nscale are examples. They grew fast because Microsoft, Meta and others needed capacity faster than they could build it themselves.
Nebius’s financing model leans on its customers. Big buyers pay upfront, and Nebius borrows against signed contracts with investment-grade companies. In effect, it’s using the future value of its data centers to pay for building them. CFO Maria Del Dado Alonso Sanchez named Microsoft and Meta as contracts that can be financed this way.
The model works well when everything ships on time. It gets dangerous when it doesn’t. If capacity is late, costs keep piling up while revenue slips.
The New Jersey Problem
The Vineland, New Jersey site is where things are breaking down. DataOne, a third-party operator, runs it. Only a little over half of the Microsoft capacity there is now set to arrive by year-end. The rest slides to Q2 2027, well past the original 2025 to 2026 window.
The official reason is that DataOne is shutting down temporary power generation faster than planned while it switches to Bloom Energy fuel cells. But that switch wasn’t entirely voluntary. Here’s what’s happened at the site:
- In August, the investigative outlet Floodlight found at least 45 natural gas generators running without permits.
- New Jersey regulators fined the facility $1.1 million for violating federal law.
- Nearby residents are suing over a constant humming noise.
Nebius’s own summary of the contract says Microsoft can terminate affected service after a grace period if deadlines are missed and no alternative capacity is offered. The contract also includes late-delivery penalties. Nebius says Microsoft “has been part of the planning process” but hasn’t said whether Microsoft has signed off on the new dates.
Why This Matters
What stands out to me is the timing. Bloomberg reported last week that Microsoft is tightening oversight of third-party neocloud projects, including those run by Nebius, IREN and Nscale. It’s also weighing whether new deals are worth signing at all. Microsoft reportedly sent its own staff to the New Jersey site.
Microsoft has already pulled back elsewhere. Bloomberg reports it passed on an option to more than double its Nscale deal in Texas, and it dropped out as anchor customer for Nscale’s planned Essex site after power delays. Microsoft’s own earnings showed lower-than-expected capex because of third-party delays.
CEO Arkady Volozh didn’t sugarcoat it:
“Building at this scale is hard, and delays are part of our industry right now. We are not immune.”
The Bull Case
Nebius has a reasonable defense. It says the delays come from sites it doesn’t control, and the data centers it builds itself are on time or ahead of schedule. Those self-built sites will supply most of its new capacity from 2027 onward.
Other numbers that help its case:
- $7.4 billion in cash at quarter’s end.
- Q3 deals came with prepayments that more than cover the build costs behind them, according to chief revenue officer Marc Boroditsky.
- Q3 revenue hit $981 million, up 571% year over year. About a third of that was a one-time payment tied to a new partnership model.
What to Watch
For anyone building on rented GPU capacity, the takeaway is simple: power, not chips, is now the bottleneck. Delivery dates from neoclouds deserve the same scrutiny as their pricing.
The next few quarters will show whether Nebius’s self-built sites can carry the load and whether Microsoft sticks around. If hyperscalers keep pulling back from partners who miss deadlines, the whole neocloud financing model gets tested, not just Nebius. Full details are available in the original TechCrunch AI report.