Nebius Plans $40–45 Billion Capex as Delays Hit Microsoft Deal

Nebius Group reported third-quarter revenue of $980.8 million on Thursday, up 571% from a year earlier — and its shares still fell 16%. The Amsterdam-based AI cloud provider cut its 2026 revenue forecast, laid out a 2027 capital-expenditure plan of $40–45 billion, and extended a month-long selloff that has erased more than a third of its market value. The gap between those two numbers is the story: explosive demand, fragile delivery.

What do the prepayments actually cover?

Customers committed more than $12 billion in contract value since the start of the third quarter, Nebius said. On agreements signed in Q3, prepayments covered more than 100% of associated capital expenditure — data center construction and networking included — up from 50–60% in the second quarter. Payback on comparable one-to-three-year contracts improved to one year and seven months, from one year and ten months, measured on a revenue basis across operating and capital costs, excluding prepayment benefit.

Nebius expects $17–20 billion of customer prepayments next year. Together with investment-grade asset-backed financing against existing contracts, it says that covers 75–85% of the $40–45 billion 2027 capex target. The company ended September with $7.4 billion in cash and about $14.2 billion in debt. In plain terms: the model works only if every promised prepayment arrives and every promised site powers up.

Why did the Microsoft site slip?

Delays at several third-party colocation sites pushed expected capacity into the first half of 2027. The largest exposure is the New Jersey campus built for Microsoft — Nebius's biggest customer, under a contract worth up to $19.4 billion. Nebius now expects to deliver more than half the contracted capacity by year-end, with the remainder scheduled for Q2 2027.

The delay stems from DataOne, the third-party site operator. In late Q3, DataOne began retiring temporary natural-gas generation ahead of a planned switch to Bloom Energy fuel cells, resetting the schedule for the remaining tranches. Microsoft "has been part of the planning process," Nebius said.

Regulatory filings show the transition was not entirely voluntary. In August, the investigative site Floodlight identified at least 45 natural-gas generators running at the DataOne facility without permits; New Jersey regulators fined the site $1.1 million, finding the generator use violated federal law. DataOne also faces a noise-complaint lawsuit from nearby residents over a constant hum.

The original Microsoft tranches were meant to deploy in 2025 and 2026. The Q2 2027 date falls well beyond that window, and the contract carries financial penalties for late delivery. Microsoft can terminate affected service after a grace period if dates are missed and no alternative capacity is offered. Nebius did not say whether Microsoft has formally agreed to the revised dates — only that Microsoft has not publicly canceled anything. The omission is the caveat.

Is Microsoft pulling back from neoclouds?

Bloomberg and the Financial Times reported last week that Microsoft passed on an option to expand Nscale's Texas contract and tightened oversight of third-party projects including Nebius, IREN, and Nscale, sending employees to the New Jersey site. Microsoft's own quarterly filing noted capital expenditure came in lower than expected due to third-party delays. Bloomberg also reported Microsoft stopped being an anchor customer for Nscale's planned Essex site after power delays.

Nebius counters that its agreements with Microsoft and Meta can be financed through asset-backed facilities and that it holds more than $40 billion of similar committed revenue. The contract structure nonetheless shows how much the neocloud model depends on hyperscaler tolerance for slippage.

Can owned sites fix the bottleneck?

Nebius said its owned sites are on time or ahead of schedule and will supply most new capacity from 2027. It has secured power and components for new owned sites in Missouri, Lappeenranta in Finland, a second Mäntsälä site, and Alabama — together more than 3 GW at full scale over three to three-and-a-half years. Contracted power exceeds 4 GW, with a year-end target of 5 GW.

"Going forward, most of the next gigawatt we are bringing online will be on our own sites," CEO Arkady Volozh said.

What does the guidance say?

Because third-party capacity moved into 2027, Nebius now expects 2026 revenue at the low end of its $3.0–3.4 billion range. The December target of $7–9 billion annualized revenue run-rate has been replaced by ARR above $7 billion in February. From 2027 the company will stop reporting ARR and will guide on revenue and pre-tax earnings instead.

For 2027, Nebius guided to revenue of $12–13 billion and pre-tax breakeven by year-end. Adjusted EBITDA in Q3 was $465.8 million, a 47% margin, while the GAAP net loss from continuing operations narrowed to $37.5 million. About $325 million of Q3 revenue was non-recurring, recognized from the initial phase of an "asset-light" model in which partners fund capacity running Nebius's architecture and platform.

Is the financing model under strain?

The neocloud playbook — long-term customer contracts and prepayments securitized into debt to fund GPU build-outs — also powers rival CoreWeave, which on Tuesday reported 168% quarterly revenue growth and a $132.5 billion backlog. Both companies depend on Nvidia, which invested $2 billion in Nebius earlier this year and is a major backer of CoreWeave.

Pressure increased after Nvidia confirmed that CEO Jensen Huang resigned Thursday. Analysts have warned that trouble at Nvidia could amplify volatility in neocloud stocks, and Nebius's 2027 breakeven target rests on converting committed prepayments into operating capacity on revised schedules while arranging the remaining financing for the $40–45 billion build-out.

"Delays are part of our industry right now. We are not immune… none of that capacity is canceled, some of it has shifted to 2027," Volozh said. The next year will test whether the prepayment-and-asset-backed-financing loop survives contact with permitting, power, and hyperscaler patience at gigawatt scale.