Microsoft declines to expand Texas data center agreement with Nscale

Why it matters

Nscale loses the potential revenue and capacity expansion tied to the unexercised option, but its existing Microsoft agreement is unchanged. Nscale must find replacement customers for the available capacity, according to the Financial Times account described in material 12.

Key facts

• 1The declined option would have more than doubled Microsoft's existing computing-capacity agreement with Nscale. shattered.io
• 2The existing Texas contract and Nscale's roughly $103 billion total contract value were reported as unaffected. shattered.io
• 3Microsoft made the decision several months before Nscale filed for its IPO in September. shattered.io

Open questions

• The report that the expansion was worth tens of billions of dollars came from Financial Times sources and was not independently verified by Reuters.
• The expansion has been described as initially involving 700 megawatts, while Nscale later told the Financial Times that it covered closer to 500 megawatts.
• The core account relies on people familiar with the matter, and Microsoft and Nscale did not comment.