THE CRUNCH
Nebius has laid out plans to spend $40 billion in 2027, well beyond what Wall Street expected, according to its third-quarter earnings call. The neocloud, which rents out AI computing capacity from data centres, intends to fund the buildout largely with customer prepayments and loans backed by customer contracts, effectively using the future value of its data centres to pay for their construction.
That strategy leans on delivery going smoothly, and the project serving one of its largest customers is not going smoothly. Nebius's contract with Microsoft, worth up to $19.4 billion, covers a data centre in Vineland, New Jersey that is now months behind schedule. Only just over half of the Microsoft capacity is planned for delivery by the end of the year, with the rest pushed to Q2 2027, well beyond the original 2025 and 2026 deployment window. The contract includes financial penalties for late delivery, and Microsoft can terminate affected service after a grace period if dates are missed and no alternative capacity is offered. Nebius says Microsoft has been part of the planning process, but did not say whether it has agreed to the new dates.
The delay stems from the site's third-party operator, DataOne, winding down temporary power generation faster than expected as it switches to Bloom Energy fuel cells, according to chief product and infrastructure officer Andrey Korolenko. That transition was not entirely by choice: New Jersey regulators fined the DataOne facility $1.1 million after an investigation found it was running dozens of unpermitted natural gas generators, and residents have filed a noise-complaint lawsuit.
The timing is awkward. Bloomberg reported last week that Microsoft is tightening oversight of third-party neocloud projects, including those run by Nebius, IREN and Nscale, and noted in its own earnings that capex came in lower than expected due to third-party delays. Nebius says the delays it faces are all at sites it does not control, with its self-built data centres on time or ahead of schedule, and that those will supply most of its new capacity from 2027. It cut its 2026 revenue forecast by $200 million to $3 billion, citing third-party site delays, while reporting Q3 revenue of $981 million, up 571% year on year, though roughly a third of that was a one-time payment tied to a new partnership model.