Microsoft tightens oversight of IREN, Nscale and Nebius

At a glance

• Microsoft is tightening oversight of data centre projects run by IREN, Nscale and Nebius, and is debating whether to sign new deals with them, Bloomberg reported on 5 November 2026.

• Nscale lost Microsoft as anchor tenant at Loughton in Essex in October after grid power slipped into the 2030s, and Microsoft has passed on doubling its Texas contract.

• Sydney-founded IREN has had cabling problems, an April generator fire and hardware delays at its Texas campus, and has agreed a revised timeline with Microsoft, Bloomberg reported.

• Microsoft's capital spending of US$45.2 billion for the September quarter came in under forecast because capacity from outside providers arrived late, its finance chief said.

• IREN's Bundey campus in South Australia holds a signed transmission agreement expected to support up to 800MW, with energisation due to start from 2028.

Microsoft has contracts worth up to about US$73 billion, on the companies' last disclosures, with three neoclouds, the specialist companies that build AI data centres and rent out NVIDIA computing: IREN, founded in Sydney; Nscale, the London company founded by Australian Josh Payne; and Nebius, based in Amsterdam. On 5 November 2026 Bloomberg reported that Microsoft is tightening oversight of projects at all three, stepping away from those it considers risky and debating internally whether to sign new neocloud deals. Bloomberg said the companies face delays, regulatory snags and high costs, and that Microsoft is focusing on its own data centres, though it has not ruled out new neocloud contracts.

Shares in Nebius and IREN fell more than 16 per cent in afternoon New York trading, and CoreWeave, another Microsoft supplier, fell about 12 per cent, Reuters reported. Reuters also noted that Texas governor-elect Gina Hinojosa has said she would ban new data centre projects until state lawmakers pass rules for the industry, and IREN's Childress campus and Nscale's Ward County site are both in Texas.

Two of the three companies were founded by Australians, and IREN is planning campuses in South Australia and New South Wales. Loughton's grid supply slipped into the 2030s, IREN's Texas buildings ran into cabling problems and a generator fire, and satellite analysis points to delays at a Nebius project. Microsoft's finance chief has tied a cut to its spending forecast to late capacity from outside providers. In Australia, IREN's Bundey campus holds a signed transmission agreement expected to support up to 800MW, with energisation due to start from 2028.

Microsoft cut its 2026 spending forecast by US$5 billion on late capacity

Microsoft raised the delays itself on 28 October 2026. Its capital spending for the September quarter, including finance leases, was US$45.2 billion, below the more than US$50 billion Microsoft had guided in July, and chief financial officer Amy Hood told analysts that some third-party capacity due in the quarter had been delayed, TechSpot reported. Microsoft cut its calendar 2026 spending forecast to about US$170 billion from US$175 billion. It expects spending to pick up in the first half of 2027 as the delayed capacity arrives. Azure revenue rose 48 per cent in the quarter.

The Information reported on 4 November 2026 that delays at IREN's Childress campus in Texas were one cause of the shortfall. Business Insider reported the same day, citing satellite analysis by research firm Aterio, that projects tied to IREN and Nebius showed signs of construction and permitting delays. Nebius said in its August shareholder letter that it had delivered all capacity tranches due to Microsoft to that date.

The three neoclouds hold up to US$73 billion of Microsoft contracts

All three contracts were signed between September 2025 and April 2026, and each ties Microsoft's payments to capacity delivered at named sites.

Source: IREN Form 8-K (3 November 2025) and release (13 August 2026); Nscale Form S-1 (18 September 2026); Nebius (8 September 2025 and 12 August 2026); Bloomberg, Financial Times, Business Insider and Reuters (October and November 2026). Values are as each company disclosed them.

Nscale's Texas expansion was dropped months before Loughton

Nscale's Texas campus is another site where Microsoft has scaled back. Microsoft will not exercise an option that would have more than doubled its Texas contract with Nscale, the Financial Times reported on 5 November 2026. A person familiar with the matter told the FT that Microsoft made the decision months ago, before Nscale filed for its US listing in September, and that the existing Texas contract stands, Capacity reported. Microsoft and Nscale declined to comment to the FT.

When Nscale announced the deal in October 2025, it said it would supply Microsoft with about 104,000 NVIDIA GB300 chips from a campus of about 240MW in Ward County, Texas, leased from crypto miner Ionic Digital. Microsoft held an option on a 700MW second phase from late 2027. Nscale has since told the FT the option was closer to 500MW and covered more capacity at Nscale's own site next door.

Nscale's Loughton site was to be Microsoft's Essex data centre until October, when Microsoft ended its anchor deal after grid officials told Nscale power would not arrive until the 2030s. Nscale had US$103.4 billion under contract at 31 August 2026, and the Texas decision does not change that figure, Capacity reported. Anthropic is in talks to rent a second 460MW building at Nscale's Monarch campus in West Virginia.

IREN handed its first Texas building to Microsoft in August

IREN's Texas campus is the project The Information linked to Microsoft's spending shortfall. IREN signed its US$9.7 billion, five-year contract with Microsoft in November 2025, to supply NVIDIA GB300 chips across four buildings at Childress with about 200MW of computing load. Microsoft prepays 20 per cent of each stage, and it can terminate, subject to a cure period, if IREN misses agreed delivery dates, IREN's filing says.

IREN announced on 13 August 2026 that Microsoft had accepted Horizon 1, the first of four 50MW buildings IREN scheduled for delivery that year. Co-chief executive Daniel Roberts said the handover showed IREN's "ability to execute complex AI infrastructure projects at speed and scale".

IREN had targeted delivery of Horizons 2 to 4 by the end of 2026. Bloomberg reported that cabling problems disrupted construction at Childress, that the site had a generator fire in April, and that IREN disclosed hardware delivery delays in August. Microsoft and IREN officials met in late October and negotiated a revised timeline that could push completion back by weeks or months, Bloomberg reported. In its September-quarter results on 5 November 2026, IREN said Horizons 2 to 4 had reached late-stage construction. IREN also moved its target of more than US$4 billion in annualised run-rate revenue, which rests on 300MW of computing load across its sites, to January 2027 from the end of 2026. It cited a customer-requested change and supplier timing, and said the target may extend to the end of February 2027.

IREN has grid power signed for its 800MW South Australian campus

IREN is one of the neocloud providers in Australia developing campuses of its own here, and its first, at Bundey, has a signed grid connection. IREN signed a transmission connection agreement on 3 June 2026 for an 800MW campus at Bundey, north-east of Adelaide. The agreement secures four 330kV feeder exits at the local substation, which IREN expects to support up to 800MW without network upgrades, and IREN says it is on track to begin energisation from 2028. In October IREN shared early plans for Redbank, a 900MW campus near Wagga Wagga, targeting a grid connection in 2029.

Microsoft is growing its Australian capacity through its own Azure footprint. It committed A$25 billion in April 2026 to expand that footprint by more than 140 per cent by the end of 2029. New South Wales approved its 96MW Huntingwood data centre in Sydney's west on 1 October 2026.

Anthropic, the other large buyer of AI capacity in Australia, is aiming to use at least 1GW by the end of 2027 under its tender for at least 1.4GW, the Australian Financial Review reported. Two of the data centres in Australia it has leased or is negotiating for, at Kogan in Queensland and Kurri Kurri in the NSW Hunter, sit beside existing high-voltage lines.

What to watch

IREN's revenue target. IREN now targets more than US$4 billion in annualised run-rate revenue by 31 January 2027, and says it may extend to the end of February 2027.

Microsoft's acceptance of Horizons 2 to 4. Microsoft's obligations under the contract start only after a delivery acceptance process, IREN's filing says.

Nscale's amended prospectus. A new filing would set the float's price range and show any change to its Microsoft contracts after Loughton and Texas.

Bundey's approvals. IREN plans early works and procurement in parallel with regulatory approvals and the conditions of its connection agreement.