Nscale, a London-headquartered firm specializing in AI data centers and backed by Nvidia, has filed for a US IPO on the NYSE, targeting a valuation of up to $35 billion. This move comes less than three years after being spun out of a crypto mining group. The company's growth is largely driven by just two customers, Microsoft and Anthropic, which account for 85% of its $103 billion in total contract value. Microsoft has signed agreements with Nscale worth approximately $43.8 billion through 2033, while Anthropic has a $44.6 billion deal for computing capacity that includes strict performance milestones. By late August, only $2.6 billion of these contracts were in effect.
Despite the significant contract values, Nscale is currently unprofitable. For the first six months of the year, the company reported a net loss of $1.02 billion on sales of $140.6 million. The IPO could see Nscale's valuation more than double from its $14.6 billion valuation in March. Nvidia is a key investor and partner, having supplied chips, guaranteed about $860 million of Nscale's lease obligations, and participated in a recent $3.1 billion funding round by taking $1 billion in convertible notes or non-voting stock.
Analysts have expressed caution regarding Nscale and its rivals, citing concerns about lease commitments and a heavy reliance on debt. The company's financial health also raised initial questions, with its filing reportedly containing language about substantial doubt over its ability to continue as a going concern, though management later indicated that delaying capital spending would address this risk. Nscale plans to maintain its UK headquarters and domicile despite listing in New York, where it believes there is a deeper pool of capital and more specialized investors for AI infrastructure.
