Sources: Nscale faces investor pushback on its ~$30B IPO valuation, with some urging a lower valuation of $16B to $19B, as Microsoft exits a UK data center deal

Your direct investment in Nscale could be worth $16B to $19B less than expected if the IPO proceeds at the lower valuation range.

Nscale, an AI cloud firm based in London, is facing significant investor pushback over its initial public offering (IPO) valuation target. The company aims for a valuation of up to $35 billion on the NYSE, but sources indicate some investors are urging a lower valuation, potentially between $16 billion and $19 billion. This resistance comes as the enthusiasm for AI build-outs cools, construction projects face delays, and rival AI infrastructure IPOs have been shelved or abandoned. Nscale reported first-half 2026 revenue of $140.6 million, a 1,252% increase year-over-year, but also a net loss of $1.02 billion. The company boasts a total contracted value of approximately $103.4 billion, largely with Microsoft and Anthropic, yet only about 2.5% of this backlog was active as of late August. Further complicating matters, Microsoft withdrew from a planned UK data center project due to power sourcing issues, and Nscale's Norwegian facility is running six months behind schedule.

The current market climate, characterized by cooling enthusiasm for AI infrastructure and a pullback in competitor stock prices, is forcing Nscale to confront a reality check on its ambitious valuation. Investor hesitation stems from a combination of factors including project delays, customer concentration risk with Microsoft and Anthropic, and Nscale's substantial net losses despite rapid revenue growth. The company's ability to activate its vast contract backlog is now under intense scrutiny as a key determinant for future valuation.

The outcome of Nscale's IPO will be a key indicator for the broader AI infrastructure sector, particularly for 'neocloud' providers. Investors will be closely watching the final IPO price, the resolution of Nscale's construction delays, and the deepening of commitments from its major clients. Success could reignite investor confidence, while a significantly lowered valuation or a postponed IPO may signal a prolonged period of recalibration for similar companies seeking public market access.