Microsoft has rejected an option to more than double its computing-power contract at a Texas data center operated by Nscale, a UK-based AI infrastructure start-up. The decision is seen as a significant setback for Nscale's plans for a stock market listing that could value the company at up to $35 billion.
Microsoft previously withdrew from a $3 billion deal to lease capacity at Nscale's data center in Essex, UK, citing delays in connecting the site to the power grid. Investors have reportedly become more cautious about the debt-laden AI infrastructure sector. The loss of the potential multibillion-dollar expansion adds to the challenges facing Nscale ahead of its planned IPO.