Microsoft Expands Cloud Computing with Nscale Data Center in Portugal

Microsoft is intensifying its cloud computing capabilities through a strategic partnership with Nscale, a British startup. Recently, Nscale secured $1.1 billion in a successful Series B funding round, indicating strong investor confidence.

Details of the Nscale Data Center in Portugal

The collaboration between Microsoft and Nscale will utilize capacity from Nscale’s data center located in Portugal. This facility is situated in Start Campus, a coastal area in Sines, Southern Portugal. The campus is primarily owned by investment firms Davidson Kempner and Pioneer Point Partners.

Projected Launch and Technology

The Nscale data center is expected to begin operations early next year. It will leverage Nvidia’s Blackwell Ultra GB300 graphics processing units (GPUs), enhancing its computing power significantly.

Strengthening Partnerships

This new agreement builds on Microsoft’s existing relationship with Nscale. Previously, Microsoft signed a $6.2 billion contract with Nscale to access high-performance AI infrastructure located in Narvik, Norway. Moreover, the two firms are working together to create the largest supercomputer in the UK.

The Stargate Project

This supercomputer is part of Microsoft’s $30 billion investment in the UK and aligns with the broader $500 billion Stargate project. This ambitious initiative is driven by OpenAI and other major tech players to enhance AI data center infrastructure.

The Rise of Neocloud Providers

• Nscale is among several neocloud providers responding to the demand from large tech companies.
• Others in this sector include Nebius, CoreWeave, and IREN Limited.

These neocloud firms focus on delivering GPU infrastructure essential for extensive AI and machine learning projects. As technology companies compete to lead in artificial intelligence innovation, the need for robust infrastructure has never been greater.

Market Outlook for Microsoft

On Wall Street, Microsoft holds a Strong Buy consensus rating. This is based on 34 Buy recommendations and one Hold from 35 analysts over the past three months. The average target price for Microsoft’s shares is $628.05, indicating a 22% upside potential from the current valuations.