Microsoft (MSFT) Stock Dips After Walking Away From UK's Largest AI Data Center
Key Takeaways
- •Microsoft withdrew from its agreement for the Loughton, Essex site that had been promoted as the UK's largest AI data center, offering no public explanation.
- •Power supply for the site, originally expected by the end of this year, was not anticipated until the 2030s according to grid officials, amid repeated project delays.
- •Nscale characterized the situation as a London-wide grid issue and said it continues collaborating with Microsoft on projects in Norway, Portugal and the United States.
- •Nscale, an Nvidia-backed company that filed for a US IPO last month, reports its total contracted value grew from $100 million to more than $103 billion in two and a half years.
- •Microsoft had earmarked part of its $30bn UK investment for a Loughton supercomputer, but has not said whether that plan will proceed at another site.
Microsoft (MSFT) stock was down 1.93% in the latest quote shown alongside a BBC report, after news emerged that the company pulled out of a UK data center deal with Nscale.
The Telegraph broke the story on Sunday, and Reuters followed with a report of its own. According to the reports, Microsoft recently ended its agreement for the Loughton, Essex site, which had been billed as the UK's largest AI data center. Microsoft declined to comment to both Reuters and the BBC, and The Telegraph did not say why the company withdrew.
Grid Delays Derailed the Project
Nscale had reportedly faced repeated delays on the project. Grid officials told the company they did not expect a power supply to arrive until the 2030s. The site had been due to receive power at the end of this year, but that timeline is now off the table.
The episode underscores how power access has become one of the defining constraints on the AI infrastructure buildout. Data centers designed for large-scale AI workloads draw substantially more electricity than conventional facilities, and multi-year waits for grid connections have become an increasingly common hurdle for projects of this kind.
Nscale described the situation as an "unfortunate London-wide grid issue" and said the problem has no impact on its other contracts. A company spokesperson said its relationship with Microsoft "remains strong and long-term." Microsoft is one of Nscale's two largest customers.
Nscale maintains that it is committed to Loughton and to the UK more broadly. The company is currently looking at alternative power sources for the Loughton site and is also exploring other potential expansion locations in the UK, though no specific locations have been given.
Nscale's Wider Business
Nscale filed for a US initial public offering last month. Its prospectus names Microsoft and Anthropic as expected major customers. The Nvidia-backed (NVDA) firm provides compute, power and data center capacity, and also sells software used for training and running AI models.
The company competes with CoreWeave (CRWV), Nebius (NBIS), Crusoe and Lambda. Nscale says it has grown from $100 million to more than $103 billion in total contracted value over the past two and a half years.
Nscale pledged £2bn for the Loughton facility last year. Microsoft was set to fund a supercomputer there, and the site was expected to create 250 permanent jobs. Last month, Microsoft said that part of its $30bn UK investment would go toward the Loughton supercomputer. With the agreement now ended, Microsoft has not said whether the supercomputer plan will proceed at a different site, or what the withdrawal means for the remainder of its $30bn UK investment.
Despite Microsoft's withdrawal from the Loughton agreement, the commercial relationship between the two companies remains active. They continue to work together on projects in Norway, Portugal and the United States, according to Nscale.
As of Sunday, Microsoft had not commented on the decision. Nscale says it is exploring alternative power sources for the Loughton site.
