The Zhitong Finance App learned that according to a source familiar with the matter, Microsoft (MSFT.US) will not exercise its right of choice to more than double the scale of leasing more computing power at a data center in Texas in an existing agreement with artificial intelligence (AI) cloud service provider Nscale.
According to reports, this potential expansion deal, if implemented, will bring Nscale tens of billions of dollars in revenue.
The person familiar with the matter requested anonymity due to the secrecy of the matter. It stated that Microsoft's decision not to extend the contract was made a few months ago, before Nscale submitted an IPO application in September, and added that Microsoft's existing Texas contract with Nscale was not affected.
According to information, the two companies reached an agreement last year. According to the expanded agreement with Microsoft, Nscale will deploy about 200,000 Nvidia (NVDA.US) AI chips at Microsoft's data centers in Europe and the US.
The news came weeks after Microsoft pulled out of a deal to anchor Nscale's flagship data center project in Lawton, Essex due to delays in electricity access that pushed its expected supply date to the 2030s.
Nscale stated in the IPO documents that between September 2025 and April 2026, it signed a statement of work with Microsoft worth up to 43.8 billion US dollars as of December 2033, excluding optional expansion clauses.
The source said that Microsoft's decision not to exercise the right of option had no impact on the total contract value of about US$103 billion disclosed by NScale in the IPO documents.
The source said that Nscale is already in discussions with a number of major customers regarding the remaining computing power production capacity of the Texas data center.
Microsoft and Nscale did not respond to requests for comment during non-business hours. Last month, it was reported that nScale is in talks to sell AI computing power to Claude developer Anthropic in a new deal that could be worth around $45 billion.