Key Takeaways
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- Nscale will build a Texas data center for Microsoft with up to 240 MW capacity, deploying ~104,000 Nvidia GB300 chips; target opening Q3 2026.
- This is the fourth Microsoft–Nscale agreement in two months, following Norway, Portugal, and the UK; Norway deal reportedly ~$6.2B over five years.
- Microsoft is leaning on “neocloud” operators to bridge compute shortages; Nscale has not yet built a data center but is pursuing rapid scale and an IPO as early as 2026.
- Project size is smaller than hyperscale benchmarks (e.g., Microsoft’s 900 MW Wisconsin site; OpenAI’s multi-site Stargate plan targeting ~7 GW), but adds near-term GPU capacity.
What happened?
Microsoft and Nscale, a 2024 spinout from a crypto miner focused on renting AI chips, announced a Texas facility slated for Q3 2026 with up to 240 MW and roughly 104,000 Nvidia GB300s. It follows three recent Microsoft–Nscale agreements in Norway, Portugal, and the UK, as Microsoft supplements its own server farm capacity with third-party “neoclouds.” Despite Nscale’s lack of an operational data center to date, Microsoft continues committing to multi-site arrangements; Nscale’s CEO has indicated IPO intentions as soon as next year.
Why it matters
The deal underscores persistent AI compute scarcity and the rise of neocloud intermediaries as stopgaps. For Microsoft, diversified supply via external operators can accelerate GPU access and geographic redundancy, potentially smoothing AI product rollouts. For Nscale, Microsoft validation may de-risk financing, but execution risk is elevated given greenfield build timelines, power procurement, interconnect lead times, and operational maturity. Scale comparisons highlight that while 240 MW is meaningful, it is modest relative to the largest hyperscale builds, implying continued need for multiple parallel projects.
What’s next?
Key milestones include site selection disclosure, power and grid interconnect agreements, construction starts, and procurement/lead-time updates for GB300 clusters. Watch financing terms for Nscale projects post-announcements in Norway/Portugal/UK, progress toward an IPO, and Microsoft’s broader strategy with neocloud partners amid competing mega-projects (e.g., Wisconsin build, OpenAI’s Stargate concept). For investors, near-term sensitivity centers on supply-chain risk, delivery schedules into 2026, and the balance of training vs. inference capacity needs shaping utilization ramp and economics.
