Microsoft Trims UK Data-Centre Plans as Regulators Circle and Wall Street Splits on Valuation

Microsoft has walked away from a deal with infrastructure operator Nscale covering a planned data centre in Loughton, Essex — a quiet recalibration of its European build-out that lands just weeks before the software giant reports first-quarter results for fiscal 2027 on 28 October.

News of the withdrawal surfaced via Reuters, citing a report in the British daily The Telegraph. Nscale said its other contracts with Microsoft remain untouched and that it is pressing ahead at the Essex site. No reason was given for the decision, and Nscale noted that a power-grid issue affecting London more broadly had no bearing on its remaining agreements.

The retreat comes as Microsoft faces a tougher supervisory climate in Britain. On Friday, the Competition and Markets Authority proposed granting the company strategic market status over its enterprise software ecosystem — a designation that would open the door to targeted interventions. The watchdog is examining how Microsoft bundles software packages and is also looking at its Copilot features, security products and licensing models. A consultation runs until 13 November 2026, with a final ruling scheduled for 13 February 2027. If confirmed, the status could bring stricter conduct requirements and binding conditions on the software business.

Power Deals and Custom Silicon

Project adjustments aside, Microsoft is still spending heavily to lock down future energy supplies. US utility NiSource announced Friday a 20-year energy agreement to provide roughly 1,100 megawatts of generation capacity for a planned Microsoft campus in northwestern Indiana. Deliveries are due to begin in 2028, and Microsoft will fund the generation and transmission infrastructure in full — a deal that underscores the vast electricity demands of running modern AI systems.

On the hardware front, the company unveiled its custom Maia 300 AI inference chip early last week. The accompanying Azure-Maia infrastructure is set to scale to multi-gigawatt installations from 2027, part of a gradual effort to reduce reliance on outside chip suppliers.

A Split Analyst Scorecard

Wall Street's view ahead of the quarterly update is anything but uniform. Deutsche Bank lifted its price target on Microsoft to $600 from $550 on 12 October, keeping a Buy rating. The same day, Phillip Securities cut its recommendation to Neutral from Accumulate with a $515 target. On 15 October, UBS raised its target to $675 from $525 and reiterated a Buy, while Citi moved to $636 from $600, also maintaining a Buy.

The shares slipped 2.1% on Friday to close at EUR 470.75, caught in a sector-wide selloff of technology and AI names. Reuters attributed the broader pressure to persistent worries about the financing costs of artificial intelligence and rising interest rates, with company-specific headlines adding to the drag. The stock now trades about 4.4% below its 52-week high, a level it touched only on 13 October.

Insider Sale and the Next Catalyst

In a planned disposal, finance chief Amy Hood sold 7,305 shares, according to a mandatory filing with the US Securities and Exchange Commission. The transaction was executed under a pre-arranged trading plan adopted under Rule 10b5-1 on 10 June 2026. Investors get their next scheduled read on operating momentum and cost trends when Microsoft posts fiscal first-quarter numbers after the US market close on 28 October.