Key points
- Microsoft cut its 2026 spending forecast by $5 billion
- Aterio identified possible delays at IREN and Nebius projects
- Microsoft's contracts include rights tied to missed delivery dates
- IREN and Nebius report results this month
Microsoft (MSFT) lowered its 2026 capital spending forecast by $5 billion on October 28, citing delays in capacity it expected from outside providers. Microsoft didn't name the companies involved.
Research firm Aterio says satellite images point to possible delays at two projects tied to Microsoft: an IREN (IREN) site in Texas and a Nebius Group (NBIS) site in New Jersey, Business Insider reported on November 4. The images don't establish that either project caused the delays Microsoft cited.
The Information separately reported that Microsoft lowered its data center spending following delays by IREN. IREN and DataOne, the developer of the New Jersey project, declined to comment to Business Insider. Nebius didn't respond. A Microsoft spokesperson said the company's infrastructure approach is built on "flexibility and optionality."
Microsoft expects some spending to move into 2027
Finance chief Amy Hood said on the October 28 call that capital spending reached $45.2 billion in Microsoft's fiscal first quarter, covering July through September. That figure includes finance leases, long-term data center leases Microsoft treats much like purchases. Some third-party capacity expected during the period was delayed, she said.
Hood forecast more than $50 billion in capital spending for October through December, putting calendar 2026 spending at about $170 billion. The previous forecast was $175 billion, CNBC reported.
Hood expects spending to pick up from January through June 2027, partly because the delayed deliveries have moved into that period. Azure grew 48% last quarter "even with" the delays, she said, and Microsoft expects 49% to 50% growth in the current quarter, excluding currency swings. Customer demand continues to exceed available supply, Hood added.
Aterio saw unfinished work at IREN's fourth building
IREN is building four 50-megawatt data centers for Microsoft in Childress, Texas, under a five-year contract worth about $9.7 billion. Satellite images from October 21 showed that the fourth building, Horizon 4, was still missing backup generators and cooling equipment, according to Aterio. The firm said the building risked missing its year-end delivery target.
Microsoft accepted the first building, Horizon 1, in August. IREN had said equipment shortages delayed it, Business Insider reported. On an August 27 earnings call, IREN said Horizon 2 was moving toward commissioning and Horizons 3 and 4 were in late construction. IREN targeted delivery of all three in the October-to-December quarter.
The images are two weeks old and don't show any work completed since October 21.
Nebius said in August that it had delivered all tranches to date
DataOne is developing the Vineland, New Jersey, site that Nebius uses to serve Microsoft under a contract worth about $17.4 billion. Aterio said roughly 140 megawatts of the project's planned capacity could slip into 2027. Aterio analyst Daud Shiraz said the project struggled to get permits for its original generators, then faced more approval delays after switching to fuel cells.
New Jersey fined DataOne $1.07 million in September over 62 gas generators installed and run without state air permits. The order gave DataOne 45 days from receipt to file for those permits.
Nebius' August update on the contract came before the fine. "To date, we've delivered all capacity tranches to Microsoft under the contract," Nebius said in an August 12 shareholder letter. The letter doesn't say how many megawatts that covers, and Business Insider doesn't say how much of the 140 megawatts is owed to Microsoft.
Both contracts let Microsoft terminate after missed deliveries
The two contracts total about $27.1 billion, and both are in our AI compute commitments tracker. Each includes a termination right tied to missed delivery dates.
IREN's November 2025 filing says Microsoft may terminate, subject to a cure period, if IREN's subsidiary misses agreed delivery dates. The filing also lists delay credits, and it says the 2026 deployment targets are subject to extension in certain circumstances.
Nebius' September 2025 filing says Microsoft can terminate a GPU service if Nebius misses agreed dates after a grace period and can't provide alternative capacity. Neither filing gives the dates or the length of those periods, and we found no disclosure that Microsoft has used these rights.
Microsoft has already left one delayed project
Microsoft pulled out of Nscale's planned data center in Loughton, England, in October, Data Center Dynamics reported. The site had been aiming for completion in late 2026, but a grid connection through the national grid isn't now expected until the 2030s. Microsoft said its $30 billion UK investment plan won't change.
Research firm Currence estimates that 30% to 50% of the data center capacity first scheduled to come online this year could be pushed into 2027 or later, according to Business Insider. The firm cited electricity shortages and other construction issues.
IREN reports on November 5, and Nebius on November 12
IREN is set to report results on November 5, and Nebius follows on November 12. IREN's update could show whether the October-to-December target for Horizons 2, 3, and 4 still stands. Nebius may be asked about Vineland's permits and what capacity remains to be delivered.
IREN closed down 11.2% at $21.71 on November 4, and Nebius fell 6.7% to $141.52. Both stocks were already falling that morning, hours before the Business Insider report appeared at 3:42 p.m. ET. Microsoft rose 6.7% to $555.80.
