Nscale reportedly faces investor pushback on its $30B IPO valuation

Some investors are pushing back on the roughly $30bn valuation that British AI cloud company Nscale is seeking in its planned New York listing, Bloomberg reported on Sunday.

A valuation of $16bn to $19bn would be more likely to attract buyers, a group of investors told Bloomberg. No decisions have been made, and Nscale has not yet formally started marketing its shares, the outlet reported.

Nscale, which rents out computing power for training and running AI models, filed for its IPO in September. According to its IPO filing, it had $103.4bn in signed and active contracts at the end of August.

Only a small share of that was already running. Microsoft and Anthropic account for about 85% of the total, Bloomberg has reported.

The company plans to list on the New York Stock Exchange under the ticker NSCL and raise up to $3bn. Its last private funding round valued it at about $15bn. The Telegraph has put the possible listing value at up to $35bn.

The valuation also matters for its existing backers. In September, Nscale raised $3.36bn in pre-IPO convertible notes led by Third Point, with $1bn from Nvidia still to arrive. Those notes convert into shares at a discount, with the conversion price capped at a $30bn valuation.

Investors’ concerns centre on delays at Nscale’s sites and a cooling market for AI infrastructure listings, according to Bloomberg. Its flagship site in Norway is running about six months behind schedule, the outlet reported.

Meanwhile, Microsoft has pulled out of a deal to be the main tenant at Nscale’s planned data centre in Loughton, Essex. Grid operators do not expect to supply power to the site until the 2030s. Microsoft’s Loughton exit came weeks before the planned listing.

Other AI infrastructure firms have also struggled to go public. Earlier this month, Australian data centre operator Firmus dropped its IPO after weak investor demand.

Shares in CoreWeave, the best-known listed AI cloud company, fell about 25% last week, their worst week since November, according to Bloomberg.

Nscale had not publicly responded to the Bloomberg report at the time of writing.