Microsoft Tightens Oversight on Neocloud Data Center Deals Amid Project Delays

Microsoft is increasing scrutiny on data center initiatives with neocloud providers such as Nebius, IREN, and Nscale, stepping back from high-risk ventures and reconsidering future third-party agreements. The company is pivoting toward expanding proprietary data centers due to power grid bottlenecks, regulatory hurdles, and execution problems. Operational issues include a generator fire at IREN's Texas facility, which led to a renegotiated timeline delayed by weeks or months. Microsoft previously exited a roughly $3 billion UK project with Nscale and opted not to double leased capacity in Texas, triggering double-digit declines in neocloud stocks.