Microsoft Withdraws from UK Data Center Project with AI Cloud Firm Nscale

Nscale said on Oct. 18 that Microsoft, which is both an investor and a customer, has pulled out of a UK data center partnership. The site had faced delays due to limited power supply.

The withdrawal adds pressure to Nscale's IPO plans. The London-based data center developer, backed by Nvidia, was seeking a valuation of about $30 billion, according to Bloomberg. Some investors have suggested a range of $16 billion to $19 billion would be more attractive, partly due to the failed IPO of Australian AI data center firm Firmus.

Nscale completed a $3.36 billion pre-IPO funding round in September, led by Third Point, with participation from Nvidia, Apollo Global Management, and others. It filed for a US listing on Sept. 18 and is awaiting SEC feedback before starting its roadshow.

Sentiment toward AI infrastructure companies has turned cautious amid rising borrowing costs and uncertainty over long-term returns. Nscale's flagship project in Norway has also been delayed by about six months due to cooling system leaks and construction setbacks.