Nscale's $30B IPO Valuation Faces Investor Pushback
Nscale wants a $30B valuation for its New York IPO, but investors are pushing back at $16-19B. Microsoft also walked away from its UK data center deal.
British AI cloud company Nscale is running into trouble on its road to the stock market. Investors are pushing back on its $30 billion IPO valuation, saying a lower range of $16 to $19 billion would be more realistic. The news comes from Bloomberg, which cited people familiar with the matter. At the same time, Microsoft has walked away from a UK data center deal with the startup, adding to the doubts.
The $30B ask
Nscale filed for a New York IPO in September 2026, aiming to list on the NYSE under the ticker NSCL and raise up to $3 billion. The company supplies rented GPU computing power for AI model training and operation - a business known as a "neocloud." Its last private funding round valued the company at about $15 billion, with a $2 billion Series C in March 2026 led by Nvidia. In September, just before filing, Nscale raised $3.36 billion through pre-IPO convertible notes led by Third Point, with Apollo, Citadel, and the Abu Dhabi Investment Council also joining. Nvidia added another $1 billion. The notes convert into shares at a discount to the IPO price, with the conversion capped at a $30 billion valuation.
Why investors are pushing back
The core concern is that Nscale's headline numbers look better on paper than in reality. The company reports $103.4 billion in total contracted value, but first-half revenue was only $140.6 million, with a net loss of about $1 billion. Very little of that contract book is live - only about 2.5% of the contracted value was active as of late August. Customer concentration is another red flag. Microsoft and Anthropic hold most of the backlog, with Microsoft agreements alone worth up to $43.8 billion. A change of plans at either could reshape the company's revenue outlook. Nscale's flagship facility in Glomfjord, Norway, is also running six months behind schedule, with only 6.4 MW live out of a planned 30 MW.
The Loughton deal that fell apart
The biggest setback is in Essex, England. Microsoft had agreed to be the anchor tenant at a planned £2 billion Nscale data center in Loughton, leasing 23,000 Nvidia AI chips at a site designed to deliver about 90 MW of power, slated to open in 2027. The problem is not chips or demand - it is electricity. UK grid operators told Nscale the site would not have sufficient power until the early to mid-2030s. Microsoft has now terminated its role in the project, leaving Loughton with no announced customer. Nscale says it remains committed to the site and is looking for alternative power sources.
What this means for AI cloud IPOs
No final decision has been made on the IPO terms, and Nscale has not yet formally begun marketing its shares. The company has not publicly responded to Bloomberg's reporting. The story is a test case for the AI infrastructure boom. Debt issuance for AI deals has already cooled, falling from $113 billion in June to $23 billion in September, according to the Financial Times. Rival Australian neocloud Firmus recently canceled its IPO entirely. If Nscale cannot get investors to buy into a $30 billion price, it may set the tone for every AI infrastructure listing behind it.