The Financial Times reports that Microsoft (NASDAQ:MSFT) will not exercise an option to expand its Ward County, Texas data centre agreement with British AI infrastructure provider Nscale, as the company prepares a potential IPO valued at about $35 billion. The option would have more than doubled Microsoft's existing lease and could have generated tens of billions of dollars in extra contract revenue, so Nscale must now find other customers for the capacity. Ionic Digital's SEC filings show Nscale has not yet secured power for the remaining capacity, where Microsoft keeps a right of first refusal. Nscale is in talks with several other potential customers, and the decision does not affect its existing $103 billion contract backlog. The company posted a net loss of $1 billion on $141 million revenue in the first half of 2026.
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| Market | US stocks |
|---|---|
| Sector | Information Technology |
| Industry | Systems Software |
| Market cap | $3.9T |
| Close on 11/04/2026 | 556.03 |
| Change that session | +6.73% |
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According to the Financial Times, Microsoft declined an option that would have more than doubled its existing contract to rent computing power at Nscale's Ward County, Texas site, a deal potentially worth tens of billions of dollars. Nscale must now find new customers for the site or lose billions of dollars in future revenue. The British AI infrastructure firm posted a net loss of $1 billion on revenue of $141 million in the first half of 2026, and Microsoft earlier pulled out of a $3 billion lease at Nscale's UK site in Essex. Nscale's West Virginia site, central to its $45 billion Anthropic deal, has faced construction delays and local opposition. Microsoft's decision will not affect Nscale's total backlog of $103 billion, though the company is preparing a roughly $35 billion IPO.
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