Tech & AI
Microsoft walks away from U.K. data center deal over power delays
Microsoft has pulled out of a planned Nscale data center in Essex after reports that the site may lack grid power for years. The move is a sign that electricity could limit AI expansion.
Quick Read
- Microsoft pulled out of Nscale's planned data center in Essex after reports that the site may not get grid power for years.
- Microsoft shares rose 0.8% on Monday, while CoreWeave fell 0.4%.
- Nscale said it remains committed to the project as it prepares a possible IPO, according to Bloomberg.
- Microsoft is scheduled to report quarterly results on Oct. 28.
What did Microsoft walk away from?
Microsoft (Nasdaq: MSFT) has withdrawn from a planned data center in Loughton, Essex, that the developer Nscale was building. The Telegraph reported that grid officials do not expect the site to get power for years.
Why it matters: The Financial Times reported that Microsoft had planned to lease all of the facility's capacity. The site was expected to hold Nvidia GB300 chips as part of Microsoft's wider AI investment in the U.K. Microsoft declined to comment to reporters.
How did the shares react?
Microsoft shares rose 0.8% on Monday and closed at $533.52. They edged down 0.2% in after-hours trading.
Nvidia (Nasdaq: NVDA), whose chips were planned for the Essex site, rose 1.4% on a day when the technology sector fund (XLK) also rose 1.4%.
CoreWeave (Nasdaq: CRWV), another AI infrastructure company, fell 0.4%. Its shares have tumbled 56.3% from their 52-week high. CoreWeave recently had its worst week since November on worries about how it funds its expansion.
What does it mean for Nscale and the AI build-out?
Nscale said it remains committed to the project and is looking at other power sources and sites. It said its long-term relationship with Microsoft remains strong and that London's grid limits would not affect other contracts.
The timing matters for Nscale. It is preparing a possible IPO, a company's first sale of shares to the public, as early as this month, according to Bloomberg. Bloomberg also reported that Microsoft and Anthropic account for most of Nscale's contracts.
The Financial Times offered a counterpoint: the Essex project is a small part of Microsoft's business with Nscale. The paper also reported that Nscale could face penalties if it misses delivery deadlines. Separately, the AI firm Firmus dropped its own IPO after struggling to attract investors.
What comes next?
What’s next: Microsoft is scheduled to report quarterly results on Oct. 28. The Fed announces its interest-rate decision the same day. The reports point to power supply, funding and construction delays as factors that could slow how fast AI data centers get built.
For readers
What it could mean for you: People who own a technology sector fund may hold companies whose growth plans lean on AI data centers. Because such funds concentrate on one industry, news that slows data center building could move them more than a broad index fund. If grid shortages delay more projects, spending on chips and computing capacity could arrive later than companies plan. Microsoft's results on Oct. 28 may offer more detail on its data center plans.
Questions and answers
Why did Microsoft pull out of the Nscale data center in Essex?
Reports said grid officials do not expect the Loughton, Essex, site to receive power for years. Microsoft declined to comment.
Does this end Microsoft's work with Nscale?
Nscale said its long-term relationship with Microsoft remains strong and that other contracts would not be affected. The Financial Times said the Essex project is a small part of Microsoft's business with Nscale.
How did Microsoft stock react to the data center news?
Microsoft shares rose 0.8% on Monday. They then edged down 0.2% in after-hours trading, the period after the regular market close.
When does Microsoft next report earnings?
Microsoft is scheduled to report quarterly results on Oct. 28. The Fed announces its interest-rate decision the same day.
The numbers
| Microsoft (MSFT) price | $533.52 |
|---|---|
| Microsoft (MSFT) change | +0.84% |
| Microsoft (MSFT) 52-week high | $543.45 |
| Nvidia (NVDA) price | $217.09 |
| Nvidia (NVDA) change | +1.38% |
| Nvidia (NVDA) 52-week high | $239.24 |
| CoreWeave (CRWV) price | $61.12 |
| CoreWeave (CRWV) change | −0.44% |
| CoreWeave (CRWV) market value | $34 billion |
| CoreWeave (CRWV) 52-week high | $139.93 |
| S&P 500 change | +0.41% |
| 10-year Treasury yield | 5.15% |
Monday’s close
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