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

Nebius used its third-quarter earnings call Thursday to lay out roughly $40 billion in planned spending for 2027, a figure well beyond what Wall Street had anticipated. The neocloud operator intends to fund that expansion chiefly through customer prepayments and loans secured by customer contracts — effectively borrowing against the future value of data centers that are not yet built. CEO Arkady Volozh acknowledged the strain on the sector: "Building at this scale is hard, and delays are part of our industry right now. We are not immune."

The delay traces to site operator DataOne, which chief product and infrastructure officer Andrey Korolenko said wound down temporary generation faster than expected as the facility transitions to Bloom Energy fuel cells. That transition was not entirely voluntary. In August, investigative outlet Floodlight identified at least 45 natural gas generators running at the DataOne site without permits for operating gas generators. New Jersey regulators fined the facility $1.1 million, finding the operations violated federal law, and nearby residents have filed a noise-complaint lawsuit over a persistent humming.

The timing matters for Nebius's financing structure, which becomes more dependent on repayments as projects mature. Reports indicate Microsoft is cooling on neocloud deals that are not delivering on schedule, and Bloomberg reported last week that the company is tightening oversight of third-party-run projects involving Nebius, IREN, and Nscale while debating whether to sign new agreements. Microsoft has also sent employees to the New Jersey site. On the call, chief revenue officer Marc Boroditsky said the Microsoft and Meta deals both included significant prepayments that arrived well before delivery, and Nebius said Microsoft "has been part of the planning process" — without confirming Microsoft accepted the revised dates. Microsoft has not publicly canceled anything.

What to watch: whether Microsoft signs off on the Q2 2027 timeline or exercises termination rights, how prepayment-heavy economics hold if capacity keeps slipping and costs pile up against delayed revenue, and whether Nebius can still raise contract-backed financing for the $40 billion plan given the permitting, litigation, and grid-transition friction now visible at one of its flagship sites.