Catenaa, Sunday, October 18, 2026- Microsoft has pulled the plug on Nscale’s UK Data Center, which was part of the $30 billion trade deal signed between UK and US last year.
The Telegraph reported that Microsoft recently announced it would pull back from the data center in Essex, threatening to undermine Nscale’s attempts to push ahead with a Wall Street flotation worth up to $35 billion, despite a brutal sell-off in AI computing stocks.
Microsoft’s data center site in Essex, equipped with 23,000 high-end Nvidia AI chips, was supposed to go online in 2027.
Microsoft is one of Nscale’s two biggest clients and, according to The Telegraph, UK ministers have promoted its Essex data center project as emblematic of the UK’s AI ambitions and lobbied local councilors to push it through.
The Telegraph report said that more than 40pc of Nscale’s $103 billion in contracted revenue comes from Microsoft, although the UK deal is believed to be a small part of that. Anthropic is another major customer.
The development comes amid heightened scrutiny of AI infrastructure financing. Investors have become increasingly concerned about whether heavily indebted data center operators can generate sufficient revenue to meet their borrowing obligations.
Nscale’s planned public offering could indicate investor demand for AI infrastructure companies that require substantial external financing. The outcome may also influence perceptions of the UK’s ability to attract investment in large-scale AI projects
Nscale, which is backed by tech giants including Nvidia, has positioned itself as Britain’s “sovereign” data center provider.
However, it has faced repeated delays, with grid bosses telling Nscale that they do not expect a power supply until the 2030s, The Telegraph said.
“We remain committed to both the Loughton project and the UK, and we are exploring alternative power sources for the site, in addition to other expansion sites in the UK. 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 for Nscale told The Telegraph.
Nscale, which boasts heavyweights including former Facebook executives Sheryl Sandberg and Sir Nick Clegg on its board, has been privately valued at $15 billion, according to The Telegraph report.
The report also said the company is seeking to raise billions of dollars in a float that could value it at more than twice that, making it one of Britain’s most valuable AI companies.
However, its plans have clashed with a major sell-off in AI infrastructure businesses amid questions about the data center building boom.
The Telegraph also cited tech analyst Gartner, which said last week that $3.5 trillion could be written off by 2030 if the AI boom fails to deliver on its promises.
Separately, Nscale has also faced delays at a flagship data center in Norway, reportedly leading to heavy penalties.
