Microsoft (MSFT) Shares Rise After OpenAI Transfers Stargate Norway Agreement

TLDR

• OpenAI has abandoned its plans to lease compute power from the Stargate Norway data center in Narvik, following the unsuccessful finalization of a deal with the UK-based AI cloud startup Nscale.
• Microsoft has stepped in, extending its existing agreement with Nscale to incorporate over 30,000 Nvidia Rubin GPUs at the 230MW facility.
• The agreement for the Narvik site is a five-year commitment commencing in 2026, will be entirely powered by renewable energy, and aims for a total capacity of up to 100,000 Nvidia GPUs.
• This development aligns with a trend where Microsoft is acquiring compute capacity previously linked to OpenAI, including a Texas project that was once associated with both OpenAI and Oracle.
• OpenAI has revised its long-term infrastructure spending projections downwards, from an estimated $1.4 trillion to approximately $600 billion by 2030, and is shifting its strategy towards leasing compute resources instead of building its own facilities.

(SeaPRwire) –   Microsoft has secured a data center deal in Narvik, Norway, that OpenAI had previously decided against pursuing. This acquisition adds more than 30,000 Nvidia Rubin GPUs to Microsoft’s current infrastructure at the location, occurring as OpenAI scales back its ambitious infrastructure plans.

Microsoft Corporation, MSFT

The facility, identified as “Stargate Norway,” is under development by the UK-based AI cloud startup Nscale. It was initially envisioned as a 230-megawatt campus, with OpenAI in discussions to lease approximately half of its capacity as an “initial offtaker.” These negotiations did not conclude successfully, leading to Microsoft’s intervention.

The new arrangement enhances Microsoft’s existing contract with Nscale at the Narvik campus. This agreement spans five years, beginning in 2026, and the compute resources will be fully powered by renewable energy. The entire site is projected to accommodate up to 100,000 Nvidia GPUs in total capacity.

“Expanding our collaboration with Nscale in Narvik is instrumental in ensuring Microsoft customers have access to the advanced AI infrastructure they require as demand continues to rise across Europe,” stated Jon Tinter, president of business development and ventures at Microsoft.

OpenAI has confirmed that it is now in discussions with Microsoft to lease compute capacity from the Narvik facility, rather than securing it directly. A representative indicated that this approach “makes more financial sense,” fitting within OpenAI’s existing $250 billion contracted expenditure on Microsoft’s Azure cloud platform.

A Broader Pattern of Pullback

This situation is not unique for OpenAI. The company recently confirmed the cessation of a separate Stargate project in the UK, citing concerns over energy costs and the country’s regulatory landscape. Microsoft had previously assumed control of a Stargate-related project in Texas that had involved both OpenAI and Oracle.

OpenAI’s strategy for infrastructure appears to be undergoing a transformation. In February, the company informed investors that it now anticipates spending around $600 billion on compute through 2030, a significant reduction from earlier projections of $1.4 trillion over an eight-year period. Reports suggest a shift towards leasing capacity rather than constructing its own data centers.

Microsoft’s stock experienced a rise of 4.19% on the day of this announcement, reflecting positive market sentiment regarding the news.

Microsoft Pushes Deeper Into AI Infrastructure

While OpenAI is scaling back, Microsoft is actively expanding its capacity. In March, Nscale announced its support for Microsoft’s deployment of Nvidia’s Vera Rubin platform across the UK, Norway, and other regions. The Narvik expansion further strengthens this partnership.

Microsoft is also planning to acquire approximately 3,200 acres in Cheyenne, Wyoming, to establish additional U.S. data center capacity. The Narvik deal complements its existing $6.2 billion investment at that site.

According to the most recent available data, 38 Wall Street analysts have assigned Microsoft a “Strong Buy” rating, with a consensus 12-month price target of $573, suggesting a potential upside of approximately 40% from current levels.