(Bloomberg) — Microsoft Corp. has committed more than $60 billion to neocloud data center companies, evidence of the company’s race to find enough computing capacity for its AI needs.
The largest chunk of that spending — about $23 billion — is going to British startup Nscale, according to people familiar with the situation, who requested anonymity to discuss the previously undisclosed sum. The arrangement with Nscale will give Microsoft access to about 200,000 of Nvidia Corp.’s latest GB300 chips at sites in the UK, Norway, Portugal and Texas.
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Like its peers, the world’s largest software company is struggling to get data centers online quickly enough to meet demand from customers and internal teams developing artificial intelligence tools. It has turned to neoclouds — a new category of small infrastructure providers which also include CoreWeave Inc. and Nebius Group NV — to help bolster its efforts.
Microsoft’s spending commitments to such companies have roughly doubled since Bloomberg tallied them in early October. Nscale declined to comment.
Just on Monday, Microsoft announced two new neocloud commitments totaling more than $10 billion. Australian firm Iren Ltd. will rent out access to chips for $9.7 billion, and Lambda Inc. inked a “multibilion-dollar” agreement with Microsoft. These follow commitments made to Nscale the previous month. Many of Microsoft’s neocloud contracts are for five-year terms, according to a person familiar with the work.
A Microsoft spokesperson said the company’s “global infrastructure approach is built on flexibility and optionality, based on the near-term and long-term demand signals we see from customers.” Using a mix of owned data centers, leased sites and third-party providers lets the company rapidly scale capacity around the world, the spokesperson said.
Renting access to servers from neoclouds speeds things up because they’ve already solved logistical challenges including obtaining sufficient power and chips. On a podcast last week, Chief Executive Officer Satya Nadella said power rather than chips accounted for the biggest bottleneck.
Rival cloud services companies, such as Amazon.com Inc., haven’t announced work with neoclouds to the same degree as Microsoft. Google is renting some capacity from CoreWeave as part of its work with OpenAI, Reuters has reported. Meta Platforms Inc. has also rented capacity from CoreWeave.
