The neocloud Nebius Group announced this week a capital expenditure plan of $40 billion to $45 billion for 2027. The figure, presented in the shareholder letter released on November 12 alongside third-quarter results, is in the range of budgets expected from giants like Google and Meta — and not a company that has yet reached profitability. What makes the number even more notable is not so much the amount itself, but how Nebius intends to fund it: with money advanced by its own customers.
In Q3 2026 results, the company's revenue reached $981 million, a 571% year-over-year increase. Adjusted EBITDA was $465.8 million, compared to a $5.2 million loss the prior year. But shares fell 16% to 17% on the day, driven by two factors: the 2026 revenue guidance was cut by $200 million (to $3 billion, at the low end of the prior range) and the revelation that delays at third-party data centers are pushing planned capacity into the first half of 2027.
Nebius's funding model differs from traditional cloud companies. Instead of issuing debt or diluting shareholders to build data centers, the company structures long-term contracts with customers like Microsoft and Meta that include substantial prepayments. In Q3 contracts, prepayments covered more than 100% of the associated capex, up from 50% to 60% in Q2. For 2027, Nebius projects that $17 billion to $20 billion in prepayments, combined with asset-backed financing of existing investment-grade customer contracts, will fund 75% to 85% of the planned $40 billion to $45 billion in capex.
The biggest piece of this puzzle is the Microsoft deal, worth $17.4 billion to $19.4 billion. The project in question is a 300MW data center in Vineland, New Jersey, operated by third-party vendor DataOne. The site has fallen behind schedule after the operator began winding down temporary generation faster than expected while transitioning to Bloom Energy fuel cells. New Jersey regulators fined DataOne $1.1 million for operating 45 natural gas generators without permits — in violation of federal law. Nebius estimates that slightly over half of the capacity contracted with Microsoft will be delivered by year-end, with remaining tranches now scheduled for Q2 2027, well beyond the original 2025-2026 deployment window.
The Microsoft contract contains termination clauses after a grace period if dates are missed without alternative capacity and includes financial penalties for late delivery. According to Nebius, Microsoft participated in the planning but did not confirm whether it agreed to the new dates. Bloomberg reported that Microsoft is tightening oversight on third-party projects and debating new agreements with Nebius, IREN, and Nscale. Microsoft noted lower-than-expected capex spend due to third-party site delays and recently stopped being an anchor customer for Nscale's Loughton project in Essex.
CEO Arkady Volozh acknowledged the problems during the earnings call but emphasized that delays affect only third-party sites. "Building at this scale is hard, and delays are part of our industry right now. We are not immune," Volozh said. He stated that all data centers built by Nebius itself are on schedule or ahead of schedule, and that most new capacity will come from those owned sites.
For 2027, Nebius projects revenue between $12 billion and $13 billion — nearly a fourfold increase over what it expects for 2026. The company also expects pre-tax break-even by Q4 2027. Nebius (ticker NBIS), which trades on the Nasdaq, ended the quarter with $7.4 billion in cash and equivalents. Total customer commitments exceed $40 billion, with new contracts signed since the start of Q3 surpassing $12 billion.
What makes Nebius a case study for the entire neocloud sector is the structural tension between ambition and execution. The model of financing today's construction with tomorrow's contracts depends on two assumptions: that customers will deliver advance payments as planned, and that computing capacity will arrive on the promised timelines. When both erode simultaneously — as with Microsoft in Vineland and Nscale in Essex — funding becomes exponentially more difficult.
The next two quarters will be decisive. If Nebius can deliver the capacity it has promised from its own sites and customer prepayments materialize as projected, the neocloud model may prove scalable. If not, the company will have to turn to traditional financing mechanisms — debt, dilution, or both — at a moment when elevated interest rates are already pressuring any gigawatt-scale infrastructure project.
Sources: TechCrunch, CryptoBriefing, CNBC
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