Nebius’ $40B buildout hinges on projects already facing delays

At the center of the problem is a Vineland, New Jersey, site operated by DataOne. Microsoft’s contract with Nebius is worth up to $19.4 billion, but just over half of the capacity covered by the agreement is now slated for delivery by year-end, with the remainder pushed to the second quarter of 2027. The tranches were originally scheduled for deployment in 2025 and 2026.

Nebius executive Andrey Korolenko said DataOne “decided to wind down the temporary generation faster than it was expected” as the site moves to Bloom Energy fuel cells. The project has also drawn regulatory and community scrutiny. Floodlight reported in August that at least 45 natural gas generators were operating there without permits; New Jersey regulators fined the facility $1.1 million, finding their use violated federal law. Nearby residents have also sued over a constant humming noise allegedly coming from the data center.

Nebius’s contract summary says Microsoft can terminate affected service after a grace period if deadlines are missed and no alternative capacity is provided. The agreement also includes penalties for late delivery. Nebius said Microsoft “has been part of the planning process,” but did not say whether the company accepted the revised dates. Microsoft has not publicly canceled the agreement.

CEO Arkady Volozh acknowledged that delays are a risk: “Building at this scale is hard, and delays are part of our industry right now. We are not immune.” Bloomberg reported that Microsoft is tightening oversight of third-party projects, including those involving Nebius, IREN and Nscale, and weighing whether to sign new agreements. Microsoft has cited third-party delays in explaining lower-than-expected capital expenditure. Bloomberg also reported that it will not exercise an option to more than double its Nscale deal for a Texas data center and has stopped being the anchor customer for Nscale’s planned Essex site after power delays.

Nebius says delays are confined to sites it does not control; it says its own data centers are arriving on time or early and will provide most of its new capacity from 2027. Chief revenue officer Marc Boroditsky said Microsoft and Meta deals included significant prepayments received before delivery. New Q3 agreements, he said, brought in prepayments that more than cover the cost of the capacity being built. Nebius ended the quarter with $7.4 billion in cash.

CFO Maria Del Dado Alonso Sanchez said prepayments and asset-backed financing tied to investment-grade contracts, including those with Microsoft and Meta, are expected to fund up to 85% of the planned $40 billion to $45 billion in 2027 capital expenditure. The company forecast 2027 revenue of $12 billion to $13 billion and said it expects to break even on a pre-tax basis in the fourth quarter.

Third-quarter revenue was $981 million, up 571% year over year, although about a third came from a one-time payment tied to a new partnership model. Nebius lowered its 2026 revenue forecast by $200 million to $3 billion, citing delays at third-party sites including New Jersey. Its shares fell 17% that day.