Microsoft Declines Multibillion-Dollar AI Expansion With Nscale in Texas

Microsoft has decided against exercising an option to expand its artificial intelligence infrastructure lease with UK cloud provider Nscale in Ward County, Texas. The rejected agreement would have more than doubled Microsoft's capacity in a multibillion-dollar deal. While Microsoft maintains its existing baseline contract with Nscale, the decision follows its earlier cancellation of a $3 billion lease at Nscale's Essex site. The setback comes as Nscale prepares for a planned $35 billion initial public offering, after posting a $1 billion net loss on $141 million in revenue for the first half of 2026.