Microsoft Exits Nscale's UK Data Center Weeks Before Its IPO

The news landed on Sunday morning, with markets closed. According to the Telegraph, Microsoft has walked away from anchoring Nscale's data center in Loughton, northeast of London.

Microsoft did not comment. The paper did not say why Microsoft walked away.

Nscale did not deny the report and blamed the power supply instead. A spokesperson said the relationship remains strong and long-term, and the London-wide grid issue has no impact on its other contracts.

News That Arrived Weeks Before the IPO

The timing matters, because Nscale is preparing to go public on the New York Stock Exchange under the ticker NSCL. The company aims to raise as much as $3B as soon as this month.

The FT put the expected valuation at about $35B; CNBC put it at $30B. In a funding round in March, the company was valued at $14.6B.

The company's pitch rests on its order book. According to the IPO filing published in September, 85% of that book comes from two customers.

Microsoft contracts signed since late 2025 are worth about $43.8B through 2033. Anthropic signed a $44.6B deal in August, tied to an eight-gigawatt campus in West Virginia whose first two gigawatts come online in 2028.

An Order Book Turns Into Revenue Only When the Power Is On

For a long time the market read AI infrastructure as a demand story. Loughton is a reminder that it is also a power and financing story.

Loughton is the concrete case. According to the Telegraph, authorities told Nscale not to expect a power connection before the 2030s. The paper had reported in July that the grid could not connect the site in time.

Nscale's flagship site in Norway is also six months behind schedule, according to Bloomberg. Only 6.4 megawatts of a planned 30 megawatts is running.

The IPO filing does not hide the risk. Management says it initially had substantial doubt about the company as a going concern because of its cash flow, and resolved it with a plan to defer and cut spending.

Same Month, Same Question

Nscale is not alone. In Australia, Nvidia-backed Firmus pulled its IPO on October 9, citing market volatility; per the WSJ, it now plans a US listing next year.

CoreWeave is the same mechanism as it shows up on the stock market. We wrote earlier about its debt-funded growth model; the stock lost about 25% last week.

Nvidia sits at every link of this chain. It took $1B of Nscale's $3.1B convertible note package and backstopped about $860M in lease obligations.

The chart below shows the Nasdaq 100 over the past month, the backdrop to the selloff in chip and infrastructure stocks.

The Part That Does Not Fit the Story

The only source is the Telegraph, and Microsoft has not spoken yet. It is unclear whether the exit reflects the grid delay or a rethink of demand.

Microsoft's other deals with Nscale, in Norway and West Virginia, remain in place. Leaving one site does not mean AI demand has fallen; it shows the grid decides when revenue starts.

What It Means for Investors

• The market has not priced the news yet; the first test comes at Monday's open in Microsoft, Nvidia and CoreWeave.
• Delays hurt debt-funded landlords most; at names like CoreWeave the revenue schedule slips while interest costs stay fixed.
• The threshold to watch is Nscale's pricing: a deal below the $30B-$35B range, or a delay, would weigh on other sector IPOs.
• The risk to this view is Microsoft saying the exit is only about power at Loughton.

Sources: Microsoft's exit rests on the Telegraph's report, relayed by Reuters and Bloomberg; Microsoft did not comment. Nscale's financials come from the IPO filing submitted to the SEC in September, as reported by Reuters and Fortune. The valuation range comes from the FT and CNBC, the Norway site from Bloomberg and Firmus's plans from the WSJ.