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, citin
Microsoft’s office in Dubai Internet City, Dubai, 3 November 2026
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.