Nebius bets $40 billion on AI buildout as Microsoft-linked delay dents outlook

Nebius said it plans to spend $40 billion in 2027, even as it cut its 2026 revenue guidance after delays at third-party data center sites, including a Microsoft-linked project in New Jersey. The announcement underscored both the scale of the AI infrastructure boom and the execution risk that comes with relying on outside operators for power, permits and delivery timing.

What Nebius said

The neocloud company laid out a far larger spending plan than Wall Street expected, projecting $40 billion in capital expenditures for 2027. Nebius said the buildout would be financed mainly through customer prepayments and loans secured by customer contracts, a structure increasingly common in AI infrastructure deals but one that depends on counterparties staying committed and projects staying on schedule.

CEO Arkady Volozh acknowledged that the company is not operating in a risk-free environment. As he put it:

“Building at this scale is hard, and delays are part of our industry right now”

and “We are not immune.”

That warning came alongside a more immediate operational problem: a Microsoft-linked capacity build in Vineland, New Jersey, is now months behind schedule. Nebius said only a little more than half of the Microsoft capacity is expected to be delivered by year-end, while the remainder has been pushed into Q2 2027.

Why it matters

The story matters because Nebius is trying to prove that a neocloud can scale aggressively without losing control of the economics. In the AI infrastructure business, revenue is tied not just to demand but to whether power plants, generators, fuel cells, permits and physical buildings arrive on time. When those pieces slip, so do bookings, cash flow and investor confidence.

For readers and the market, the bigger issue is what the delay says about the sector’s financing model. Nebius is leaning on customer prepayments and asset-backed borrowing to support a spending plan that could reach $40 billion to $45 billion in 2027. That can work when demand is strong and customers keep paying early. It becomes more fragile when one of the largest contracts in the pipeline is late.

The company’s update also signals a broader tension in the AI buildout: the industry wants speed, but many projects still depend on third-party sites with their own operational, environmental and regulatory problems. That mismatch can slow the delivery of compute just as customers are racing to secure it.

How the Microsoft-linked delay developed

Nebius said the Vineland project was held up because DataOne, the third-party site operator, has been winding down temporary power generation faster than expected while switching to Bloom Energy fuel cells. Nebius chief product and infrastructure officer Andrey Korolenko said the company “decided to wind down the temporary generation faster than it was expected,” which contributed to the missed schedule.

The New Jersey site already faced scrutiny before Nebius’ latest update. Floodlight found at least 45 natural gas generators at the DataOne site in August, New Jersey regulators fined DataOne $1.1 million over generator use, and nearby residents filed a noise-complaint lawsuit over constant humming from the data center.

Those details help explain why a project like this can move from a promising AI capacity expansion to a delivery headache. A data center is not just server racks and software. It is also fuel, cooling, local approvals, grid access and neighbors who may not want the noise.

What happened to revenue guidance?

Nebius reduced its 2026 revenue outlook by $200 million to $3 billion, citing delays at third-party sites. The company said that the setback affects the timing of when it can recognize revenue from capacity that was supposed to come online sooner.

At the same time, Nebius reported third-quarter revenue of $981 million, up 571% from a year earlier. Roughly one-third of that revenue came from a one-time payment tied to a new partnership model, a reminder that the company’s growth rate is being boosted by both underlying demand and unusually large contract structures.

Nebius also said its new Q3 deals included prepayments that covered more than the cost of the associated capacity, strengthening the argument that customers are willing to pay upfront for access to AI infrastructure. Still, the revised 2026 outlook shows how quickly timing changes can alter the near-term financial picture.

By the numbers

Background: what is a neocloud?

Neoclouds are infrastructure providers built around AI compute. Unlike traditional cloud companies that grew first around general enterprise storage and software, neoclouds focus on supplying the GPUs, power and data center capacity needed to train and run AI models at scale.

That business can require enormous upfront spending long before revenue fully catches up. To manage that gap, data center projects often use customer prepayments and project finance tied to contracts. The logic is straightforward: if a customer commits to buying future capacity, lenders may be willing to finance the construction against that contract.

But the model has obvious pressure points. If power delivery slips, if construction takes longer than expected, or if a third-party site runs into permitting or local opposition problems, the company may face delayed revenue without necessarily being able to slow down spending at the same pace.

Nebius’ latest report captured that tension in full view. The company is not short on demand. It is short on certainty about when outside projects will be ready to deliver the capacity that demand depends on.

What the Microsoft relationship tells us

The Microsoft deal is central because of both its size and its timing. TechCrunch reported that Nebius’ contract with Microsoft is worth up to $19.4 billion, making it one of the company’s most important commercial relationships. Yet the same arrangement now sits at the center of the schedule slip in New Jersey.

Nebius said Microsoft can terminate the affected service after a grace period if deadlines are missed and no substitute capacity is offered. Microsoft has not publicly canceled the arrangement, but the contract language shows how much leverage the customer retains when delivery lags.

Marc Boroditsky, Nebius’ chief revenue officer, said Microsoft and Meta deals both came with significant prepayments received well before delivery. That point matters because it suggests the company has already collected meaningful cash from customers even before the machines are fully online.

Bloomberg also reported that Microsoft is tightening oversight of third-party projects and weighing new agreements. Microsoft separately said its capital expenditures were lower than expected because of third-party delays, reinforcing the idea that the bottleneck is not limited to one company.

Can Nebius finance this pace of growth?

Nebius says yes, at least for now. The company ended the quarter with $7.4 billion in cash and said prepayments plus asset-backed financing could cover up to 85% of its planned $40 billion to $45 billion in 2027 capex.

That is an unusually aggressive plan, but it is not being made in a vacuum. The company also forecast 2027 revenue of $12 billion to $13 billion and expects to reach pre-tax breakeven by Q4. In other words, Nebius is arguing that its spending will feed into a much larger revenue base quickly enough to support the financing burden.

There is still a distinction between a financing plan and an execution plan. The former may look strong on paper if customers have signed contracts and made prepayments. The latter depends on third parties like DataOne delivering power on time and on Nebius’ own self-built data centers coming online as expected.

The company said its self-built data centers are coming online on time or early and should supply most new capacity from 2027. That is important because it suggests Nebius wants to rely less on outside sites as it scales. Still, the near-term problem is that the Microsoft-linked project is not yet where it was supposed to be.

What happened to the shares?

Investors did not reward the update. Nebius shares fell 17% at the close after the earnings report, reflecting concerns that the spending plan and the delayed revenue timeline may be harder to reconcile than the company had hoped.

That reaction is not surprising. A higher capex forecast can impress if it signals confidence and a route to market leadership. It can also spook investors if the underlying projects appear vulnerable to delays, permitting disputes or customer pushback. In this case, the market appears to have focused on the latter.

Timeline

The key developments can be traced in a short sequence of events:

What happens next

The most important question is whether Microsoft accepts the revised delivery timetable. Nebius says the customer can terminate the affected service after a grace period if deadlines are not met and no substitute capacity is offered, so the contractual response will matter as much as the construction schedule.

Another question is whether DataOne can resolve its power, permitting and noise issues without further disruption. The company has already been fined by New Jersey regulators, and the site has faced a noise-complaint lawsuit from nearby residents. Those pressures could affect the pace of any reset.

Investors will also watch whether Nebius can keep its own self-built data centers on track. If those facilities continue coming online on time or early, the company may be able to offset third-party slippage with capacity it controls directly.

Finally, the broader market will be watching whether this becomes a warning for other AI infrastructure financings. If more projects depend on temporary generation, outside operators and contract-backed borrowing, then the gap between demand and delivery may stay wide for longer than many investors expect.

The bottom line

Nebius is trying to scale like a major AI infrastructure player while financing much of that growth through the contracts it signs today. The company’s latest report shows that model can generate explosive revenue growth and large cash balances. It also shows how quickly one delayed third-party site can force a revenue reset, a timetable change and a sharp stock reaction.

For now, Nebius is still building, still booking contracts and still betting that the next wave of capacity will arrive on time. The question is whether the industry’s appetite for speed can keep outrunning the practical realities of power, construction and local pushback.