Nebius announced $40 billion in planned capital spending for 2027 during its third-quarter earnings call Thursday, exceeding Wall Street expectations. The neocloud company plans to fund the buildout through customer prepayments and loans backed by customer contracts.
CEO Arkady Volozh acknowledged execution risks. "Building at this scale is hard, and delays are part of our industry right now," he said. "We are not immune."
The company's financing strategy faces pressure from delayed projects. Microsoft, one of Nebius' largest customers with a contract worth up to $19.4 billion, is already experiencing months of delays on a data center in Vineland, New Jersey. Only just over half of the Microsoft capacity is now planned for delivery by year-end, with the rest coming in Q2 2027. The original tranches were meant to deploy in 2025 and 2026.
According to Andrey Korolenko, Nebius' chief product and infrastructure officer, DataOne, the site's third-party operator, "decided to wind down the temporary generation faster than it was expected" during a switch to Bloom Energy fuel cells. In August, investigative site Floodlight reported at least 45 unpermitted natural gas generators at the site. New Jersey regulators fined DataOne $1.1 million for violating federal law.
Microsoft's contract allows termination after a grace period if dates are missed and no alternative capacity is offered. The contract also includes financial penalties for late delivery. Nebius said Microsoft "has been part of the planning process" but did not confirm Microsoft agreed to new dates.
Bloomberg reported last week that Microsoft is tightening oversight of third-party data center operators, including Nebius, and debating new agreements. Microsoft also noted its own capex spend was lower than expected due to third-party delays.
Marc Boroditsky, Nebius' chief revenue officer, said new Q3 deals came with prepayments covering the cost of building capacity behind them. The company ended the quarter with $7.4 billion in cash. Prepayments plus asset-backed financing are expected to cover up to 85% of the $40 to $45 billion 2027 capex spend.
Nebius reported third-quarter revenue of $981 million, up 571% year-over-year, though roughly a third came from a one-time payment. The company cut its 2026 revenue forecast by $200 million to $3 billion, citing delays to third-party sites. Shares fell 17% Thursday.