Nebius Plans $40 Billion Investment Amid Operational Challenges
The AI infrastructure provider faces mounting pressure as project delays and regulatory fines impact its ambitious growth plans.
Financial Strategy and Risks
Nebius, an AI services provider, announced a $40 billion investment plan by 2027 during its third-quarter financial report. While this figure significantly exceeds market expectations, the company’s ambitious roadmap is already facing real-world difficulties that have unsettled investors.
Nebius’s strategy relies on customer prepayments and contract-backed loans, effectively using the future value of its data centres to fund their construction. However, as CEO Arkady Volozh noted, executing projects of this scale is complex, and Nebius has not been immune to industry-wide delays.
The data centre in Vineland, New Jersey, has proven particularly problematic, with capacity delivery for Microsoft falling behind schedule. Under a $19.4 billion contract, only half of the equipment intended for Microsoft will be ready by the end of this year, with the remainder delayed until the second quarter of 2027.
Legal and Technical Obstacles
The delays stem from the third-party operator, DataOne. It was revealed that the facility was using dozens of natural gas generators without proper authorisation, leading regulators to fine the company $1.1 million. Furthermore, local residents are challenging the project in court over noise complaints, casting doubt on the stability of the site.
Microsoft, a key partner for Nebius, is tightening oversight of third-party projects. Reports suggest the tech giant is closely monitoring partner compliance and may decline to sign new agreements if project timelines continue to slip.
Future Outlook
Despite these challenges, Nebius maintains that its self-built data centres are progressing on schedule and will drive capacity growth starting in 2027. CFO Maria del Dado Alonso Sanchez stated that up to 85% of the projected 2027 expenditure could be covered by prepayments and asset-backed financing.
Although the company’s year-on-year revenue grew by 571%, Nebius has reduced its 2026 revenue forecast by $200 million. Following this news, the company's share price fell by 17%. Nebius aims to generate $12–13 billion in revenue by 2027 and reach break-even by the fourth quarter.