Microsoft cools on neocloud deals as IREN, Nebius, Nscale face delays and rising costs
11/05/2026 — 11/06, 00:20·2 sources (all)·2 reports (all)
Key takeaways
- Microsoft has cooled on its neocloud partnerships after signing deals worth tens of billions of dollars with emerging data center operators…
Background & analysis
In October 2025, Nscale disclosed a deal with Microsoft to lease compute capacity at the Ionic Digital site in Ward County, Texas. In early 2026, Microsoft cancelled a $3 billion lease with Nscale for its Essex data center in the UK. On November 5, 2026, the Financial Times reported, citing three people familiar with the matter, that Microsoft had decided to drop an option to more than double the size of its existing compute lease in Texas. That leaves Nscale to find a new customer for the site or lose billions of dollars in potential revenue. Both Microsoft and Nscale declined to comment. Nscale said the decision not to exercise the Texas option would not affect its total backlog of $103 billion. Shares of Aker, Nscale's largest shareholder, fell 7.5% on the news. Nscale, a UK AI startup backed by Nvidia and led by former Australian crypto miner Josh Payne, had its $35 billion listing plans face renewed strain from the dual setbacks.
AI-generated from 1 reports · updated 8 hours ago
Latest turnMicrosoft is pulling back from neocloud partners including IREN, Nebius and Nscale, citing delays and costs, Bloomberg reports. The company had earlier signed tens of billions of dollars in contracts with such upstart data center operators to meet demand for its cloud and AI services.
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Microsoft is pulling back from neocloud partners including IREN, Nebius and Nscale, citing delays and costs, Bloomberg reports. The company had earlier signed tens of billions of dollars in contracts with such upstart data center operators to meet demand for its cloud and AI services.
Bloomberg TechnologyAI score 56Microsoft has dropped an option to more than double its existing Texas compute lease with Nscale, after canceling a $3 billion UK data-center lease earlier this year, the Financial Times reported, citing three people familiar with the matter. Nscale says the move will not affect its $103 billion contract backlog, but majority shareholder Aker fell 7.5%.
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