Nscale, a high-value UK AI startup racing toward an IPO, has suffered a series of setbacks. At the start of the year, Microsoft cancelled a $3 billion UK lease, and the company has now also abandoned plans to take on a Texas data center expansion—a double blow that puts its $35 billion listing plan to the test. Nscale said Microsoft's decision not to exercise the Texas expansion option does not affect its $103 billion contract backlog, but market confidence has already been shaken, with shares of major shareholder Aker falling 7.5%. Add to that earlier large losses, construction delays at some sites, growing industry concerns over the high-debt operating model of AI infrastructure, and policy and public opinion pressure on data center development in multiple locations—and its IPO prospects are under mounting pressure. Nscale has already found new customers for part of the capacity at the Texas site, is working to fill the remaining capacity, and is in talks with Anthropic on expansion cooperation. Whether it can quickly rebuild its customer base and move these negotiations forward will directly affect its financing capacity and IPO timeline.