Microsoft Exits UK AI Data Center Deal With Nscale Amid Grid Delays Ahead of Planned $35B IPO

Microsoft $MSFT has canceled its agreement to serve as the anchor tenant at UK provider Nscale's first British AI data center in Loughton, Essex, where it was the only announced customer and had agreed to rent 23,000 Nvidia $NVDA AI chips. Originally scheduled to come online in 2027 as part of £22B in UK investments Microsoft promised in 2025, the site has suffered repeated delays, with grid operators informing Nscale that a power connection is not expected until the 2030s. The exit complicates Nscale's efforts to pursue a Wall Street flotation worth up to $35B (£26B) — more than double its $15B private valuation — amid a broader sell-off in debt-reliant AI infrastructure stocks and rising interest rates. More than 40% of Nscale's $103B in contracted revenue comes from Microsoft alongside major customer Anthropic, though the Essex deal is believed to account for a small portion of that total, and Nscale has separately faced delays and reported penalties at a flagship facility in Norway. "We remain committed to both the Loughton project and the UK and we are exploring alternative power sources for the site, in addition to other expansion sites in the UK. Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts." — Nscale spokesman