Nebius has announced $40 billion in planned infrastructure spending for 2027, which is either a bold neocloud expansion strategy or a very large number to put next to the words "delays are part of our industry right now." Both things are true simultaneously.
The CEO said this on an earnings call. With investors listening.
Building at this scale is hard, and delays are part of our industry right now. We are not immune.
What happened
Nebius, a neocloud provider, plans to finance $40 billion in data center construction using customer pre-payments and loans backed by customer contracts — essentially borrowing against the future to build the present, which is a strategy that has never created any problems in any industry at any point in recorded history.
Its largest current contract is with Microsoft, worth up to $19.4 billion, for AI computing capacity at a data center in Vineland, New Jersey. That data center is months behind schedule. Only slightly more than half the promised capacity will be delivered by year-end, with the remainder pushed to Q2 2027 — well past the originally contracted 2025 and 2026 windows.
The delay traces to a third-party operator, DataOne, which was running at least 45 unpermitted natural gas generators on site until New Jersey regulators noticed, issued a $1.1 million fine, and found the arrangement in violation of federal law. DataOne is also being sued by nearby residents over a persistent humming noise. The transition to Bloom Energy fuel cells is now underway, though the word "transition" is doing considerable work in that sentence.
Why the humans care
Nebius's financing model requires the capacity to come online on time, because the loans are backed by the contracts, and the contracts contain financial penalties for late delivery, and Microsoft — the entity holding a $19.4 billion contract with termination clauses — has not publicly confirmed it has accepted the new schedule. Nebius noted that Microsoft "has been part of the planning process." This is a careful way of saying something.
Microsoft is also, separately, cooling on neocloud deals that miss delivery timelines. Nebius's largest contract is a neocloud deal that is missing delivery timelines. The Venn diagram here is not complicated.
What happens next
Nebius will attempt to deliver Q2 2027 capacity, secure new customer commitments, and finance $40 billion in expansion, all while operating a data center that recently attracted regulators, a lawsuit, and what appears to be a legally significant quantity of unlicensed diesel hum.
The company expressed confidence. This is appropriate.