Nebius plans to spend up to $45 billion on data centers in 2027

Nebius plans to spend $40–45 billion on capital expenditures in 2027, far more than the market expected. The company expects customer prepayments and loans backed by contracts to cover up to 85% of that amount, but some projects are already running late. Nebius’s largest customer, Microsoft, is waiting for computing capacity in New Jersey behind schedule: just over half of the planned capacity is due by year-end, with the rest in the second quarter of 2027. If timelines slip, Nebius risks increasing spending before the revenue comes in.

Nebius plans to spend up to $45 billion on data centers in 2027

Cash upfront, capacity later

Nebius plans to build new data centers using customer prepayments and loans secured against contracts. This approach lets the company finance construction with future revenue, but leaves it exposed if projects are delayed or canceled. On the quarterly earnings call, CEO Arkady Volozh acknowledged that delays are now common across the industry and that Nebius is not immune.

The timing problems coincide with reports that Microsoft is scrutinizing deals with data-center operators more closely when they fail to meet their commitments. That matters especially for Nebius: it needs to bring capacity online on time to receive the payments set out in its contracts.

Microsoft is one of Nebius’s largest customers. A contract worth up to $19.4 billion calls for computing capacity at a data center in Vineland, New Jersey. The current plan is to deliver just over half of that capacity by year-end and the rest in the second quarter of 2027.

Site operator DataOne accelerated the retirement of temporary generators. According to Andrey Korolenko, Nebius’s chief product and infrastructure officer, the generators were taken offline sooner than expected as the data center transitions to Bloom Energy fuel cells.

The New Jersey site and contract terms

In August, investigative outlet Floodlight reported that at least 45 gas generators were operating at the DataOne site, even though the facility did not have permits to use them. New Jersey regulators fined DataOne $1.1 million after finding that the generators’ operation violated federal law.

Residents in neighboring areas have also filed a lawsuit over persistent humming noise that they allege is coming from the data center.

Under the terms of Nebius’s contract, Microsoft can terminate service for the affected portion of the agreement after a grace period if delivery deadlines are missed and alternative capacity is not provided. Delivery of individual batches was originally planned for 2025 and 2026, putting the second-quarter 2027 date beyond those deadlines. The contract includes financial penalties for delays.

Nebius said Microsoft was involved in the planning. The company did not say whether the customer had agreed to the new timeline. Microsoft has not publicly announced that it is canceling the agreement.

Microsoft reassesses deals with operators

On the earnings call, Nebius Chief Revenue Officer Mark Bororoditski said that deals with Microsoft and Meta included substantial prepayments made well before capacity was delivered. But Bloomberg reported last week that Microsoft is tightening its oversight of third-party operator projects, including those run by Nebius, IREN and Nscale, and is discussing whether new agreements make sense. Bloomberg also reported that Microsoft sent employees to the New Jersey site.

In its quarterly report, Microsoft said capital expenditures came in below expectations because of delays by third-party contractors. Bloomberg also reported that the company will not exercise an option to more than double its agreement with Nscale for a data center in Texas. Microsoft also recently stopped being the anchor customer for Nscale’s planned data center in Essex after power-supply delays.

Nebius attributes its delays to problems at sites it does not control. The company says its own data centers are coming online on schedule or ahead of schedule and will provide most of its new capacity from 2027. Mark Bororoditski added that prepayments under new deals signed in the third quarter more than cover the cost of the corresponding capacity. Nebius had $7.4 billion in cash at quarter-end.

Forecasts and quarterly results

According to CFO Maria del Dado Alonso Sanchez, prepayments combined with financing backed by investment contracts could cover up to 85% of 2027 capital expenditures, which are expected to total $40–45 billion. She named Microsoft and Meta among the customers whose contracts qualify for this arrangement. Bororoditski also said Nebius could use prepayments if it needs additional financing.

The company forecasts revenue of $12–13 billion in 2027 and expects to reach pretax break-even by the fourth quarter.

Nebius reported third-quarter revenue of $981 million, up 571% year over year. About a third of that amount came from a one-time payment tied to a new partnership model. The company cut its 2026 revenue forecast by $200 million to $3 billion, citing delays at third-party sites, including in New Jersey. Nebius shares ended the day down 17%.

Dataist’s take: Nebius’s plan depends not only on the amount of future investment but also on bringing sites it does not control online on time. Prepayments and cash on hand give the company a financial cushion, but delays have already affected its revenue forecast, and the Microsoft contract includes penalties and the option to terminate some services.