Microsoft has pulled out of its data center deal with Nscale, the Nvidia-backed British AI cloud builder — and the reason has nothing to do with GPUs. Britain's Telegraph reported Sunday that Microsoft, one of Nscale's two largest customers, recently terminated its agreement for the data center in Loughton, Essex, after repeated delays. According to the report, national grid officials told Nscale they did not expect a power supply for the site until the 2030s.
That is the AI boom's most honest headline in weeks. The industry spent 2024 and 2025 fighting over chips; Broadcom's Hock Tan has argued the real bottleneck was already money, not silicon. But in the UK — where every major AI infrastructure announcement runs into the same wall — the binding constraint is megawatts. A data center you can't plug in is a spreadsheet exercise, and Microsoft apparently decided Loughton's was no longer worth the wait.
Nscale is pushing back on the framing. "Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts," a spokesperson told Reuters, adding that the company remains committed to Loughton and is exploring alternative power sources for the site, along with other UK expansion locations. Microsoft did not respond to requests for comment.
The timing is uncomfortable. Nscale filed for a US IPO last month with Microsoft and Anthropic expected to be its major customers, according to its prospectus — and the company has scaled from $100 million to more than $103 billion in contracted value in two and a half years. Its entire pitch to public investors is that it can deliver compute where hyperscalers can't, on a schedule they can count on. A flagship UK site losing its anchor tenant to a decade-long grid delay is the exact risk case the prospectus asks investors not to dwell on.
It also isn't the first time Microsoft has walked off Nscale's capacity. According to TechTimes, Microsoft exited a 1.35-gigawatt commitment at Nscale's West Virginia campus, and weeks later Anthropic signed a $45 billion, six-year deal for 460 megawatts at the same site — the largest contract in Nscale's backlog. There's now a visible pattern: Microsoft frees up capacity, Anthropic or another lab absorbs it.
Watch what happens to Loughton. Nscale says it will find alternative power; if it can't, the question is which hyperscaler backfills the space — and whether the UK's grid connection queue keeps eating everyone else's schedules too.
— via Reuters