Microsoft reportedly rejects option to expand Nscale’s Texas AI deal

Microsoft has turned down an option to more than double the computing power it rents from Nscale at a data centre in Barstow, Texas, the Financial Times reported on Thursday.The extra capacity could have been worth tens of billions of dollars to the London-based AI cloud company, the FT said, citing people familiar with the matter.

The option was part of a deal the two companies signed in October 2025. Under it, Nscale agreed to supply Microsoft with about 200,000 Nvidia GB300 chips, the processors used to train and run AI models, across sites in the US and Europe.

Texas was the biggest part of that deal, as Nscale leases a 240-megawatt campus in Barstow from bitcoin miner Ionic Digital. It is due to deliver about 104,000 chips to Microsoft there from the third quarter of 2026,

At the time, Nscale said Microsoft also held an option on a second, 700-megawatt phase at the site from late 2027. The existing Texas contract stays in place. A person familiar with the matter told the FT that Microsoft decided months before Nscale filed for its IPO in September.

The news follows another setback for the partnership. In October, Microsoft pulled out of a deal to anchor Nscale’s site in Loughton, Essex, billed as the UK’s largest AI data centre. Grid delays had pushed its power supply into the 2030s.

Nscale, which counts Nvidia among its backers, is asking investors to value it at up to $35bn in its New York listing. Before filing, it closed a $3.36bn pre-IPO round and pitched a large backlog of contracted future revenue.

Aker, the Norwegian group that owns about 23% of Nscale, has played down the UK loss.

“That was one, relatively speaking, minor contract in a bigger portfolio,” Aker chief executive Øyvind Eriksen said of the Essex deal.

Meanwhile, Nscale is also courting Anthropic, as last month the two were in talks over a computing deal worth about $45bn.

Story by Alina Maria Stan

Alina Maria Stan builds connections that people actually feel. As co-founder and COO of Tekpon, she turns product intuition into real moment (show all) Alina Maria Stan builds connections that people actually feel. As co-founder and COO of Tekpon, she turns product intuition into real moments of discovery, shaping how teams find and adopt SaaS every day. Since 2020, she has led Tekpon’s brand voice, media strategy, and growth plays with a clear focus on human outcomes behind every metric. Before Tekpon, Alina followed curiosity across industries and countries. She was CEO of King Casino Bonus and led affiliate and brand strategy at Extremoo Media and Fable Media in Denmark, where she learned how to build partnerships that last. Early on, she sharpened her CRM and pricing instincts at K.H. ApS, always asking why customers choose what they choose. Her approach is rooted in more than a decade of international experience and two master’s degrees, one in Sustainable Consumption from the Technical University of Munich and one in Consumer Affairs Management from Aarhus University.