Microsoft declines to double Nscale data-center deal, steps away from risky projects amid post-midterm AI buildout rethink
What happened
Microsoft is declining the option to double the size of its deal with Nscale to rent more computing power from a Texas data center, and plans to tighten oversight of its data-center projects, according to a Bloomberg report published Thursday and covered Friday morning. Internally, Microsoft is reconsidering advancing deals with its data-center partners and is 'stepping away from projects it deems risky,' per Bloomberg. A Microsoft spokesperson told Reuters the company's approach to infrastructure 'is built on flexibility and optionality, combining Microsoft-owned data centers, leased facilities and strategic partnerships.' Microsoft shares fell 3.7% on Thursday.
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Start your free 14-day trialWho’s affected
- Microsoft (MSFT) — directly pulling back on leased compute capacity and tightening project oversight
- Nscale (private) — loses a potential doubling of a major Texas deal
- Nvidia (NVDA), Broadcom (AVGO), Alphabet (GOOGL) — hyperscaler and chip demand read-through, all fell Thursday; neocloud/data-center operators (IREN, Applied Digital, CoreWeave, Nebius) — fell more than 12% Thursday as the buildout slowdown narrative spread.
Sources