Microsoft Corp. will not exercise an option to more than double its existing agreement with AI cloud provider Nscale to rent more computing power at a Texas data center, Reuters reported on Thursday, citing a person familiar with the matter. The companies struck a deal last year for Nscale to deploy around 200,000 Nvidia AI chips with Microsoft across its data centers in Europe and the U.S. The reported development signals more pain for the IPO-bound Nscale; last month, Microsoft pulled out of a deal to anchor Nscale's flagship data center project in Essex, the UK, after power connection delays pushed its expected supply date into the 2030s. Nscale, backed by Nvidia, filed for an IPO in September, although a report last month said it faced opposition from investors over its $130 billion IPO valuation target. Reuters reported that Microsoft's decision to not expand the Texas contract was made several months ago, before Nscale filed for its IPO, and that its existing workflow, as per the original, was not affected. On Stocktwits, retail sentiment for MSFT flipped to 'bearish' from 'bullish.' Year to date, MSFT stock is up 15.6% as of its last close.