Nebius and Mega Or Break Ground on $880 Million AI Data Center Facilities in Israel

Nasdaq-listed cloud and AI infrastructure company Nebius has signed a landmark data center agreement with Israeli developer Mega Or, committing approximately $880 million to construct two new facilities that will significantly expand Israel's AI computing capacity. Under the agreement, Nebius will receive data center services from sites in Masmiyya and Beit Shemesh, with a combined capacity of 80 megawatts. The Masmiyya facility is scheduled for delivery in Q3 2026, while the Beit Shemesh site will be delivered in stages from Q3 2026 through Q1 2027. The deal comes amid a broader data center construction boom in Israel, driven by surging global AI demand and supportive government policy. Israel's cabinet recently approved fast-track measures to accelerate AI data center permitting, with Energy Minister Eli Cohen announcing construction has begun on facilities that will collectively use 1 gigawatt of energy. Meanwhile, utility firm Dalia Energy has announced plans for the "Ofek" (Horizon) data center outside Ashdod — set to become Israel's largest facility at 130 megawatts when completed in H2 2029. Built by a consortium including Serverfarm and the Israel Infrastructure Fund, the project carries an estimated construction cost of $1.5 billion, with total costs potentially reaching $4-5 billion including server equipment. The Israeli data center market, currently home to 14 operators across 34 facilities contributing around 300 MW, is expected to more than double in capacity. Twenty-four upcoming facilities are projected to add over 900 MW by 2029, pushing the market from $630 million in 2026 to nearly $1 billion by 2031. Nvidia has also outlined expansion plans, with a multibillion-dollar campus planned near Yokneam that includes a $500 million server farm, with construction due to start in 2027. The rapid growth reflects Israel's ambition to position itself as a major hub for AI infrastructure in the Middle East and Mediterranean region.