Microsoft passes on an option to more than double its Texas AI capacity deal with Nscale
Microsoft will not take up a 700 megawatt second phase at Nscale's Texas site, reports say; the current contract stands and adds to data-centre doubts.
Microsoft will not take up an option to more than double its rented AI computing capacity at an Nscale data centre in Texas. That is according to a person familiar with the matter, first reported by the Financial Times. The option covered a second phase of about 700 megawatts from late 2027. It would have been worth tens of billions of dollars to Nscale.
The existing Texas contract of about 230 megawatts of Nvidia systems is not affected. Nscale has put the total value of its Microsoft contracts at about 103 billion dollars, and it is in talks with other large customers about the rest of the site. The decision was reportedly made months ago. It follows Microsoft's exit from Nscale's planned UK site in Essex, where grid connection delays pushed supply into the 2030s. Neither company commented. The news landed as investors were already worried about a slower data-centre buildout.
Sources
- Microsoft declines option to expand Texas data center deal with Nscale, source says — Reuters, 4 Nov 2026 (primary source)
- Microsoft declined option for expanded compute contract in Texas with Nscale — DatacenterDynamics, 5 Nov 2026