Neocloud

Nscale Loses Microsoft Before Its I.P.O., and Its Valuation Wobbles

co-produced by AI19. October 2026, 07:50

First the power was missing, and now the tenant is gone too: Microsoft has pulled out as the anchor tenant of Nscale’s first British data center in Loughton, England, The Telegraph reports. Nscale is seen as Europe’s biggest hope in A.I. infrastructure, and the setback could hardly come at a worse time. The company wants to go public in New York, and investors are already questioning its target valuation.

No Power Until the 2030s

Microsoft was set to rent 23,000 Nvidia A.I. chips at the site in Essex and was its only announced customer. The deal was part of the billions Microsoft pledged to invest in Britain last year around President Trump’s state visit. The data center was originally scheduled to come online next year. But grid operators have told Nscale they do not expect to supply power until the 2030s, according to The Telegraph. Microsoft declined to comment.

Nscale says it remains committed to the project and to Britain and is exploring alternative power sources. It describes its relationship with Microsoft as strong and long-term and says the “London-wide grid issue” does not affect its other contracts. That matters a great deal for Nscale: Microsoft accounts for more than 40 percent of its total order backlog, according to The Telegraph. Its other major customer is Anthropic. It is already Nscale’s second setback in Britain. In the spring, OpenAI shelved a planned “Stargate” data center with Nscale in northeast England, citing high British electricity prices.

A Valuation Under Pressure

The timing is awkward. In September, Nscale filed its I.P.O. prospectus with the S.E.C. and plans to list on the New York Stock Exchange under the ticker NSCL. It had been aiming for a valuation of about $30 billion. According to Bloomberg, some investors consider only $16 billion to $19 billion appropriate. In its last private funding round, Nscale was valued at $14.6 billion. Nothing has been decided yet: Nscale is still working through comments from the S.E.C. and has not formally started marketing its shares.

The figures in the prospectus explain the skepticism. In the first half of the year, Nscale had revenue of $140.6 million and a net loss of about $1 billion. Its order backlog totals $103 billion, but only $2.6 billion of that comes from contracts already running. The rest is capacity that has yet to be built. Loughton shows where the risk lies: A signed contract is of little use if the data center cannot get power.

The Whole Sector Is Shaky

Nscale is not alone in its troubles. The Australian data center operator Firmus recently called off its I.P.O., citing market conditions. According to The Information, industry executives expect only seven to 10 of the hundreds of so-called neoclouds, specialized providers of A.I. computing power, to survive. Nvidia supports many of them through credit terms and leases, and the chipmaker is also an investor in Nscale.

In Europe, Nscale competes with Amsterdam-based Nebius, which is already listed on Nasdaq, and Finland’s Verda, which recently became a unicorn. Mistral is building its own data centers in France under the Mistral Compute brand.

Nscale still has prominent supporters. At an event in London, Nvidia’s chief executive, Jensen Huang, praised the company effusively, saying it could become the most valuable British start-up of the past decade. Its board includes Sheryl Sandberg and Nick Clegg, both former top executives at Meta.