Nscale IPO Valuation Under Fire as Investors Push for $16B-$19B Price Tag Amid AI Market Uncertainty

Nscale Pushes Forward with IPO Despite Valuation Dispute

British AI cloud firm Nscale is moving ahead with plans for a New York IPO by year-end, targeting a valuation of $30 billion to $35 billion, even as investors push back on the ambitious pricing1

1

2

2

. The AI infrastructure company, which rents computing power for training and running AI models, filed IPO paperwork in September and plans to list on the New York Stock Exchange under ticker NSCL, aiming to raise up to $3 billion2

2

. However, a group of investors told Bloomberg that a valuation of $16 billion to $19 billion would be more realistic and likely to attract buyers, citing recent setbacks in the AI sector and delays affecting Nscale's facilities2

2

4

4

.

CEO Reassures Staff Amid AI Market Jitters

Founder and CEO Josh Payne sent an internal memo to staff on Tuesday addressing growing AI sector concerns, stating that demand for Nscale's services remained "insatiable"1

1

. Payne acknowledged employee worries about how companies in the AI infrastructure space are funding future growth but emphasized that Nscale still has "more than $100 billion in contracted revenue" backed by long-term customer contracts and a robust capital structure1

1

3

3

. The memo comes as widespread investor pressure mounts following share price falls of close to 25 percent last week for neocloud competitors like CoreWeave and Nebius1

1

.

Microsoft Exit and Contract Fragility Raise Questions

Nscale's path to listing has been complicated by Microsoft's decision to pull out of a contract to rent capacity at the company's planned east London data center in Loughton, Essex1

1

2

2

. Grid operators don't expect to supply power to the Loughton site until the 2030s, prompting Microsoft's exit just weeks before the planned listing2

2

. Despite this setback, Payne stated that Microsoft remained "committed" to its partnership with Nscale1

1

. The fragility of Nscale's contracts has come under increased scrutiny, particularly since Microsoft and Anthropic account for about 85 percent of the company's total contracted value2

2

.

Anthropic Deal at Risk Over Delivery Timelines

Anthropic, one of Nscale's two largest customers alongside Microsoft, could walk away from its $45 billion deal if the AI cloud firm fails to hit financing or delivery timelines for its major project in West Virginia1

1

3

3

. Nscale is also negotiating with Anthropic for a second multibillion-dollar deal in West Virginia, though terms have yet to be agreed1

1

. The company has come under increasing pressure to roll out its planned data centers or risk industry-standard penalties for late delivery1

1

. At the end of August, Nscale had more than $103 billion in total contracted value, but only $2.6 billion of this was active1

1

3

3

.

Financial Performance and Valuation Concerns

Nscale reported a net loss of $1 billion on revenue of $141 million in the first half of 20261

1

3

3

. The company was valued at $14.6 billion in a March funding round when it raised $2 billion, though sources indicate an IPO is unlikely to take place at any valuation close to that figure1

1

. In September, Nscale raised $3.36 billion in pre-IPO convertible notes led by Third Point, with $1 billion from Nvidia still to arrive2

2

. These convertible notes convert into shares at a discount, with the conversion price capped at a $30 billion valuation, making the final Nscale valuation critical for existing backers2

2

.

Broader AI Infrastructure Market Challenges

The valuation dispute reflects broader cooling in the AI infrastructure market. Australian data center group Firmus abandoned a $5 billion listing in Sydney this month, citing "recent market volatility," which helped spark a wider rout in AI-related stocks1

1

2

2

. Nscale's flagship site in Norway is running about six months behind schedule, adding to investor concerns about the company's ability to meet delivery commitments2

2

4

4

. Norwegian investment company Aker, a major shareholder in Nscale, saw its stock decline nearly 5 percent following news of the valuation pressure4

4

. Watch for whether Nscale adjusts its valuation expectations or proceeds with its ambitious target, as this will signal broader market appetite for AI infrastructure investments amid mounting questions about the sustainability of the AI boom.