OpenSight News: Cloud

Microsoft passes on an option to more than double its Texas AI capacity deal with Nscale

Ari — Fri, 06 Nov 2026 00:00:00 GMT

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

Amazon posts its best margin ever while AI spending turns cash flow sharply negative

Ari — Sat, 31 Oct 2026 04:00:00 GMT

Amazon reported third-quarter sales of about 202 billion dollars, up 12 percent. Operating income rose to about 28 billion dollars, the highest margin in the company's history. Its cloud arm AWS grew 39 percent, the fastest pace in nearly five years. But capital spending reached about 77 billion dollars in the quarter. Free cash flow over the last twelve months fell to about minus 42 billion dollars.

Earnings per share were 1.89 dollars, below a year earlier, when gains on the Anthropic stake lifted profit by 9.5 billion dollars. For the fourth quarter Amazon expects sales of 240 to 247 billion dollars. The shares opened about 5 percent lower on 30 October and recovered most of the loss. The result fed a broad sell-off in technology stocks that day, as investors weighed fast AI-driven cloud growth against the cash it consumes.

Sources

Amazon.com Announces Third Quarter Results (Form 8-K, Exhibit 99.1) — Amazon, 29 Oct 2026 (primary source)

Microsoft's Azure grows 48 percent while the company stays cash positive

Ari — Fri, 30 Oct 2026 04:00:00 GMT

Microsoft reported revenue of about 92 billion dollars for the quarter to September, up 19 percent. Azure revenue grew 48 percent to about 33 billion dollars. This is the first quarter in which Microsoft reports an Azure revenue figure on its own. Spending on property and equipment was about 39 billion dollars. Unlike some rivals, the company still produced strong positive cash flow.

The wider Microsoft Cloud reached about 64 billion dollars, up 30 percent. Operating income rose 21 percent to about 46 billion dollars. Results landed the same evening as Alphabet's and drew the opposite market reaction, which shows investors now judge AI spending by whether it pays for itself.

Sources

Microsoft Announces First Quarter Results (FY27 Q1) — Microsoft, 28 Oct 2026 (primary source)

Alphabet's cloud revenue doubles but heavy spending pushes cash flow negative again

Ari — Fri, 30 Oct 2026 04:00:00 GMT

Alphabet reported third-quarter revenue of about 128 billion dollars, up 25 percent. Google Cloud more than doubled to about 31 billion dollars. Capital spending reached about 51 billion dollars in the quarter. That pushed free cash flow below zero for the second quarter in a row. Diluted earnings came in at 2 dollars 12 cents per share.

Operating margin was 31.8 percent and net income 26.2 billion dollars. Over the trailing twelve months free cash flow is still positive at 19.7 billion. The quarter shows the trade-off the large clouds are making: very fast growth in AI-driven cloud demand, paid for with infrastructure spending that now exceeds what the business generates in cash.

Sources

Alphabet Announces Third Quarter 2026 Results (Form 8-K, Exhibit 99.1) — Alphabet, 28 Oct 2026 (primary source)

Kubernetes starts a working group to define workload conformance

Ari — Thu, 29 Oct 2026 12:15:00 GMT

The Kubernetes community has formed a Workload Conformance Working Group. Certified Kubernetes already tests clusters, and the AI Conformance programme tests whether a cluster can run AI workloads, but nothing comparable exists for the applications themselves. Operators still check each workload by hand before a node drain or an upgrade.

The charter names three deliverables: a specification of workload behaviour per Kubernetes minor version, a method to test each requirement against a running workload, and upstream tooling that runs those tests. The scope spans security, resilience to disruption, resource use, networking, storage, API usage and observability. Every requirement must have an objective, automated test. SIG Architecture will own the specification and SIG Apps brings the application view. The group aims for a stable first specification within two to three release cycles.

Sources

Announcing the Workload Conformance Working Group — Kubernetes project, 27 Oct 2026 (primary source)