Nebius tests the neocloud playbook with $40 billion in planned spending

Summary

• Nebius announced $40 billion in planned spending for 2027 during its third-quarter earnings call, exceeding Wall Street expectations.
• The company plans to fund construction through customer pre-payments & loans backed by customer contracts.
• CEO Arkady Volozh acknowledged that delays are common in the industry & stated the company is not immune to them.
• Microsoft is reportedly cooling on neocloud deals that fail to deliver on time, creating risk for Nebius's financing strategy.
• A $19.4 billion contract with Microsoft for a Vineland, New Jersey data center is months behind schedule, with only slightly over half the capacity planned for delivery by year-end.
• The remaining Microsoft capacity is now scheduled for delivery in Q2 2027, well beyond the original 2025 & 2026 deployment window.
• Delays at the New Jersey site stem from DataOne winding down temporary generation faster than expected while switching to Bloom Energy fuel cells.
• New Jersey regulators fined DataOne $1.1 million for operating 45 natural gas generators without permits, violating federal law.
• DataOne faces a noise-complaint lawsuit from residents regarding constant humming from the facility.
• The Microsoft contract allows termination after a grace period if dates are missed without alternative capacity & includes financial penalties for late delivery.
• Nebius stated Microsoft participated in planning but did not confirm if Microsoft agreed to the new dates.
• Bloomberg reported Microsoft is tightening oversight on third-party projects & debating new agreements with Nebius, IREN, & Nscale.
• Microsoft noted lower-than-expected capex spend due to third-party delays & recently stopped being an anchor customer for Nscale's Essex site.
• Nebius claims its self-built data centers are coming online on time or ahead of schedule.
• Total prepayments & asset-backed financing are expected to cover up to 85% of the $40 billion to $45 billion 2027 capex spend.
• Nebius forecast 2027 revenue of $12 billion to $13 billion & expects to break even on a pre-tax basis by the fourth quarter.
• Third-quarter revenue reached $981 million, a 571% increase from the prior year, with roughly one-third attributed to a one-time partnership payment.
• Nebius cut its 2026 revenue forecast by $200 million to $3 billion due to delays at third-party sites.
• Shares ended the trading day down 17%.