OpenAI has decided to abandon its plans to rent compute capacity directly from a Norwegian data center, known as the 'Stargate Norway' facility in Narvik, just days after pausing a similar project in the U.K. Microsoft is now set to take over the compute capacity that was previously earmarked for OpenAI at the planned 230MW facility, which is being developed by UK AI cloud startup Nscale. OpenAI is currently in discussions to rent capacity from Microsoft instead, with a spokesperson stating that this approach makes more financial sense and falls under existing contracted spending with Microsoft [1].
OpenAI was initially in talks to rent around half of the facility's capacity, but ultimately did not reach an agreement with Nscale, leading Microsoft to step in and take up the available capacity. Nscale announced that Microsoft is expanding its agreement at the Narvik campus, which will include the deployment of more than 30,000 Nvidia Rubin GPUs. In March, Nscale also stated it would support Microsoft with the deployment of Nvidia's Vera Rubin platform across sites in the UK, Norway, and other regions [1].
OpenAI has referenced its October announcement of a $250 billion contract to purchase services from Azure, Microsoft's cloud-computing division, as part of its ongoing partnership. The company has also moved to temper expectations regarding its spending plans, especially as a potential IPO is anticipated this year. OpenAI confirmed it halted its U.K. Stargate project due to energy costs and regulatory concerns, and in March, it announced the closure of its video generation service Sora [1].
Despite these shifts, OpenAI continues to attract significant funding, having closed a record $122 billion funding round in March at a post-money valuation of $852 billion. The company informed investors in February that it is targeting roughly $600 billion in investments following a series of AI infrastructure announcements in 2025 [1].
CONCLUSION
OpenAI's withdrawal from the Stargate Norway data center deal marks a strategic shift towards leveraging its existing partnership with Microsoft for compute capacity. While the company is scaling back some infrastructure projects, it continues to secure substantial funding and remains focused on expanding its AI capabilities through collaborations with major partners like Microsoft. The market impact is medium, reflecting both the operational changes and the ongoing investor confidence in OpenAI's growth trajectory.