Microsoft has rejected an option to more than double its existing computing contract with Nscale, worth tens of billions of dollars, according to sources. The US software giant passed on expanding its deal at a Texas data centre site, dealing a blow to Nscale's ambitions. Nscale, backed by Nvidia and led by former Meta executive Sheryl Sandberg and former UK deputy prime minister Sir Nick Clegg on its board, faces pressure to secure new customers.
The setback comes as Nscale prepares for an IPO this year. Investors have grown wary of debt-laden AI infrastructure construction. Earlier this year, Microsoft also pulled out of a $3bn deal for an UK data centre in Essex.
Nscale's flagship West Virginia site, central to a $45bn deal with Anthropic, has faced construction delays and local opposition. In its IPO prospectus, Nscale stated it has up to 1.2GW of capacity coming online in Ward County, Texas. Around 500MW is connected, with the remaining 700MW due from an adjacent site developed by crypto miner Ionic Digital.
Nscale reached a deal with robotics company Figure in September to lease capacity at its own site. The company says it has "line of sight" to about 10GW of potential power capacity.
Source: Financial Times Companies · Summarized by HeadlinesBriefing