TL;DR

Microsoft has declined an option to more than double its contract for computing power at Nscale’s Texas site, the FT reported on 5 November, citing three unnamed sources. The paper valued the lost expansion in the tens of billions of dollars. It comes weeks after Microsoft left Nscale’s Essex project, so the company the FT calls the UK’s most valuable AI start-up now heads towards a listing with two reported retreats by the same customer.

Two versions of the timing

The accounts differ in emphasis. The FT frames it as a fresh test of a planned £26 billion ($35 billion) listing, and says Nscale must find other customers or forgo billions in future revenue. Reuters, confirming the core fact through its own source, adds that Microsoft decided several months ago, before the September IPO filing, and that the existing Texas contract stands.

Both report that the total backlog, about £77 billion ($103 billion), is unaffected, and that talks with other prospective customers are running. Neither company commented to the FT or answered Reuters outside business hours, so none of this is on the record from either side.

The detail matters for what was actually lost. Nscale originally described an option on a 700MW second phase, the FT reports. It now tells the paper the figure was nearer 500MW, on its own Ward County land rather than the neighbouring site crypto miner Ionic Digital is building.

Why investors will care

Neoclouds depend on new contracts to keep borrowing. The FT puts Nscale’s first-half 2026 result at a net loss of about £750 million ($1 billion) on revenue of about £105 million ($141 million), with its West Virginia site, central to a £34 billion ($45 billion) Anthropic deal, hit by delays and local opposition. Texas is also becoming less friendly ground, with incoming Democratic governors, including the state’s own, calling for a moratorium on new data centres.

We reported Microsoft’s exit from Loughton in October, and the Anthropic talks soon after. In our view, the question for UK policymakers is what this concentration means: a British AI champion leaning on US buyers such as Microsoft and Anthropic, with sites reaching from Texas to Norway.

Looking Forward

The prospectus and any pricing will show how investors weigh these reports. Watch for a named replacement customer in Texas, since Reuters’ source says discussions are already running, and for any expansion of the Anthropic arrangement, which the FT says is under discussion for a second 460MW facility.