Nebius says customer prepayments now cover its AI build-out costs

Nebius Group has found a way to build AI data centers with its customers’ money. In its Q3 2026 shareholder letter, the company said customer prepayments on contracts signed in the quarter exceeded 100% of the related capital expenditures.

Nebius (NASDAQ: NBIS) is an Amsterdam-based AI cloud infrastructure provider. It released the letter on November 12, 2026. The company framed the prepayment shift as a path to less reliance on expensive debt, with pre-tax profitability targeted by late 2027.

From half-funded to fully funded in one quarter

The jump was steep. In Q2 2026, customer prepayments covered 50% to 60% of associated capex. One quarter later, that figure cleared 100%.

Nebius credited better customer terms. Contracts now carry longer commitment periods and larger upfront payments. Pricing also rose, exceeding $25 million per megawatt annually.

The economics improved on the return side too. Nebius said the payback period on its investments shortened to approximately 1 year and 7 months, down from 1 year and 10 months in Q2 2026.

The top line also had a strong quarter. Q3 revenue reached $980.8 million, a 571% year-over-year increase that beat analyst expectations.

The spending plan gets bigger

Nebius is not using its new funding cushion to slow down. It raised its 2026 capex guidance to approximately $27 billion.

For 2027, the company expects capex between $40 billion and $45 billion. That spending is meant to support more than 1 GW of new capacity.

Most of that future spending is expected to be financed through customer prepayments and asset-backed financing tied to investment-grade contracts.

Revenue guidance came with a caveat. Nebius now expects 2026 revenue at the lower end of its $3 billion to $3.4 billion range. The company pointed mainly to delays in third-party capacity.

The 2027 outlook is far larger. Nebius projects revenue between $12 billion and $13 billion next year.

Microsoft and a $40 billion backlog

Nebius has a customer deal with Microsoft valued between $17.4 billion and $19.4 billion.

That contract helps push the company’s total contracted backlog above $40 billion. Nebius is also targeting 5GW of contracted power capacity by the end of 2026.

Why the stock fell anyway

Investors did not exactly throw a parade. Shares dropped between 16% and 23% after the report, amid broader volatility across the sector.

The reaction makes more sense when the pieces are laid side by side. Capex guidance went up sharply. Revenue guidance for 2026 slipped to the bottom of its range.

What this means for Nebius and the AI cloud race

The most important shift is in who carries the financial risk. When customers fund more than the full cost of new builds, Nebius is no longer betting its own balance sheet on future demand.

Concentration is the flip side. A single Microsoft deal accounts for a large share of a backlog that exceeds $40 billion.

The pricing data also offers a read on the wider AI compute market. Rates above $25 million per megawatt annually, paired with longer commitments, suggest buyers are still prioritizing access to capacity over cost.

For shareholders, the checklist going forward is fairly clear. Watch whether prepayment coverage holds above 100% on new contracts, or drifts back toward the 50% to 60% seen in Q2. Watch whether third-party capacity delays clear before they spill into the 2027 revenue target of $12 billion to $13 billion. And watch the payback period, which shortened to approximately 1 year and 7 months as of Q3.

The late-2027 pre-tax profitability goal sits at the end of all of those threads. Nebius has shown it can get customers to pay for the construction. Now it has to finish building on time.