Neocloud company Nebius outlined an aggressive $40 billion in planned spending for 2027 during its third-quarter earnings call, exceeding Wall Street expectations. The ambitious expansion relies heavily on customer prepayments and loans backed by customer contracts, utilizing the future value of its data centers to finance their construction.
However, this high-stakes financial model is encountering hurdles as infrastructure delays mount. Nebius CEO Arkady Volozh acknowledged the difficulties on the call, stating that building at this scale is hard and delays are part of the industry right now, adding that the company is not immune.
Key takeaways
- Nebius laid out $40 billion in planned spending for 2027 during its third-quarter earnings call.
- The expansion relies on customer prepayments and loans backed by customer contracts.
- A Vineland, New Jersey data center project with Microsoft is months behind schedule.
- Nebius reported third-quarter revenue of $981 million, representing a 571 percent increase year-over-year.
The Microsoft Contract and New Jersey Site Delays
One of Nebius's major clients is Microsoft, which is paying for AI computing capacity at a data center in Vineland, New Jersey, that has fallen months behind schedule. The contract is worth up to $19.4 billion, but delivery deadlines are slipping. Only slightly more than half of the Microsoft capacity is now scheduled for delivery by the end of the year, with the remaining portion pushed to the second quarter of 2027.
The delays stem from third-party operator DataOne winding down temporary generation faster than expected as the site transitions to Bloom Energy fuel cells. The transition follows regulatory issues after investigative site Floodlight identified at least 45 natural gas generators operating without permits at the DataOne site in August. New Jersey regulators subsequently fined the facility $1.1 million for violating federal law, while DataOne also faces a noise-complaint lawsuit from local residents.
Under the terms of the agreement, Microsoft can terminate affected service after a grace period if deadlines are missed and alternative capacity is not provided. Reports indicate Microsoft is tightening oversight on third-party projects and assessing its agreements, though Nebius noted that Microsoft has participated in the planning process and has not publicly canceled any orders.
Financial Outlook and Prepayment Strategy
Despite headwinds from third-party sites, Nebius executives defended their financing approach. Chief revenue officer Marc Boroditsky noted that deals with major clients like Microsoft and Meta included significant prepayments arriving ahead of delivery. CFO Maria Del Dado Alonso Sanchez stated that prepayments and asset-backed financing of investment-grade contracts are expected to cover up to 85 percent of the $40 billion to $45 billion projected capital expenditures for 2027.
Nebius closed the quarter with $7.4 billion in cash and reported third-quarter revenue of $981 million, up 571 percent from the previous year, though roughly a third of that figure came from a one-time payment tied to a new partnership model. Looking ahead, the company forecasts 2027 revenue between $12 billion and $13 billion, expecting to break even on a pre-tax basis by the fourth quarter. At the same time, Nebius lowered its 2026 revenue forecast by $200 million to $3 billion due to ongoing third-party site delays, and company shares ended the trading day down 17 percent.
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