Mega Or and Nebius Unveil $880 Million Data Center Build for Israel's AI Sector

Mega Or, through its subsidiary Mega DC, has announced plans to build and operate two new data center facilities at a combined construction cost of approximately $880 million. The facilities, located in Masmiyya and Beit Shemesh, will provide 80 MW of combined capacity to Nebius, the AI-focused cloud computing company spun out of Yandex. The Masmiyya facility is scheduled for delivery in the third quarter of 2026, while the Beit Shemesh campus will be delivered in stages from Q3 2026 through Q1 2027. The Beit Shemesh facility is particularly ambitious, potentially spanning 54,000 square metres with an investment exceeding $2 billion over a decade if demand warrants expansion to a maximum of 220 MW by 2035. The deal reflects surging demand for AI compute infrastructure in Israel. The government has approved measures to accelerate data center construction, with Energy Minister Eli Cohen announcing that construction has begun on AI data centers that will consume 1 gigawatt of energy. Israel plans to double its power plant construction targets, aiming to build four new power stations by the end of the decade specifically to support the data center boom. Israel's data center construction market is expected to grow from $1.16 billion in 2025 to $2.12 billion by 2031, driven primarily by AI workloads. However, the country faces challenges: existing facilities designed for enterprise IT are being stressed by sustained GPU power draw, extreme rack densities, and cooling requirements that leave no margin for error. Industry observers note that Israel still lags behind global leaders in the pace of deploying graphics processors for AI processing.