Microsoft is taking over OpenAI's planned Norway Stargate data center

Microsoft $MSFT has expanded its agreement with U.K. AI cloud company Nscale to take over compute capacity at a 230 MW data center campus in Narvik, Norway — capacity that had been earmarked for OpenAI under its "Stargate" infrastructure initiative.

A source told CNBC that OpenAI wanted to lease roughly half of the Narvik facility's capacity and had described itself as the "initial offtaker" at the site. However, Nscale and OpenAI ultimately failed to finalize terms, at which point Microsoft stepped in to absorb the available capacity. Rather than securing capacity directly from Nscale, OpenAI said it plans to obtain that compute through Microsoft, since this makes better use of funds already committed under a previously announced $250 billion contract with Azure, Microsoft's cloud division.

"We are moving ahead with our plans in Norway," an OpenAI spokesperson told CNBC. "Microsoft is an important partner in our network, and we will work with them to access compute in Norway just as we already do in other parts of the world."

The deal calls for Nscale to bring over 30,000 Nvidia $NVDA Rubin GPUs online at the Narvik campus as part of the broadened arrangement. The company described the deployment as one of the largest onshore infrastructure projects in Norway. An earlier Nscale commitment, made in March, had already positioned the company to help bring Nvidia's Vera Rubin platform to Microsoft facilities spanning the U.K., Norway, and additional locations.

"Expanding our work with Nscale in Narvik helps ensure Microsoft customers have access to the advanced AI infrastructure they need as demand continues to grow across Europe," Jon Tinter, president of business development and ventures at Microsoft, said in a statement.

The Norway development follows a separate retreat by OpenAI from another Stargate project. OpenAI paused its Stargate U.K. data center project earlier this month, citing high energy costs and the country's regulatory environment. That project had called for deploying as many as 8,000 GPUs — with longer-term ambitions reaching 31,000 — through a partnership that also involved Nscale and Nvidia.

The Norway retreat is part of a broader pattern of OpenAI scaling back certain capital commitments. The company wrapped up a $122 billion fundraise in March, leaving it valued at $852 billion on a post-money basis. Despite the pullbacks, OpenAI's stated ambition of reaching approximately $600 billion in compute expenditures by 2030 remains on the table, according to guidance the company provided to investors in February.