The Zhitong Finance App learned that, according to reports, British data center developer Nscale is considering delaying its US $35 billion listing plan until next year. The report said that company executives are evaluating whether to suspend the initial public offering (IPO) scheduled to take place soon in New York. A final decision has yet to be made.
Nscale submitted a listing application to the NYSE in September, with a target valuation of up to 35 billion US dollars. The round of financing earlier this year valued it at 14.6 billion US dollars. Some investors now believe that its value may be less than half of the IPO target. The answer to why the listing window is narrowing at this time is not on the demand side.
Microsoft abandons expansion orders, Nscale contract structure is under pressure
Recently, it was reported that Microsoft (MSFT.US) will not exercise its right of choice to more than double the scale of leasing more computing power at a data center in Texas in its existing agreement with Nscale. According to a source familiar with the matter, this potential expansion deal, if implemented, will bring Nscale tens of billions of dollars in revenue. The person familiar with the matter said that Microsoft's decision not to expand the contract was made a few months ago, before Nscale submitted an IPO application in September, and added that Microsoft's existing Texas contract with Nscale was not affected.
The two companies reached an agreement last year. Under the expanded agreement with Microsoft, Nscale will deploy approximately 200,000 Nvidia (NVDA.US) AI chips in Microsoft's data centers in Europe and the US. The news came weeks after Microsoft pulled out of a deal to anchor Nscale's flagship data center project in Lawton, Essex due to delays in electricity access that pushed its expected supply date to the 2030s.
Nscale stated in the IPO documents that between September 2025 and April 2026, it signed a statement of work with Microsoft worth up to 43.8 billion US dollars as of December 2033, excluding optional expansion clauses. The source said that Microsoft's decision not to exercise the right of option had no impact on the total contract value of about US$103 billion disclosed by NScale in the IPO documents. The source said that Nscale is already in discussions with a number of major customers regarding the remaining computing power production capacity of the Texas data center. However, it was reported last month that NScale is in talks to sell AI computing power to Claude developer Anthropic, with a potential transaction value of about 45 billion US dollars.
The listing window is being squeezed by multiple pressures
According to reports, the direct reason for Nscale's delay in IPOs was the sell-off in global technology stocks, and investors' interest in AI infrastructure companies has clearly cooled down. On November 5, the Nasdaq Composite Index fell about 5.5% in a single day, the Nasdaq 100 index fell sharply by 6.36%, and the market value evaporated by about 2.3 trillion US dollars. On the same day, competitor CoreWeave (CRWV.US) fell 9.83%, Nebius (NBIS.US) fell 14.94%, and Cipher Digital fell 14.62%.
But the real trigger was not the disappearance of demand for computing power, but rather a reassessment of policy variables. The Democratic Party won the Senate and House of Representatives in the US midterm elections, and won the positions of governor in Texas, Ohio, Nevada, Georgia, Michigan, and Pennsylvania.
Together, these states account for approximately 45% of the planned data center capacity in the US, and Texas alone accounts for 25%. UBS estimates that about 30% of the new US capacity in 2028 may be affected by the suspension of construction; New York State set a limit on projects above 50 megawatts as early as July.
There are concerns that the Democratic Party may slow down data center expansion, putting more pressure on heavily indebted AI infrastructure companies.
What supports the $35 billion valuation?
What supports this valuation is, first and foremost, its rapidly expanding asset size. By the end of August, the company's operating and construction capacity was about 1.37 gigawatts, of which 1 gigawatt of its own site, 200 megawatts leased, and 165 megawatts hosted; about 25,000 GPUs were in operation, and a total of 461,000 units in operation and construction.
However, the cost of scaling up is that losses and leverage are rising at the same time. Revenue for the first half of the year increased by 1,252% year-on-year, with a net loss of US$1.02 billion, and a cumulative loss of US$1.86 billion; at least US$3.1 billion in convertible bonds were issued in September, of which US$2.1 billion was unsecured convertible bonds.
At the same time, the market frame of reference is shifting downward. CoreWeave's bond yield once exceeded 15%, and interest spreads on credit default swaps hit a new high. The market's pricing of new cloud companies is shifting from computing power narratives to contract fulfillment and financing costs.
For Nscale, delaying listing is exchanging time for a valuation anchor; however, the more concentrated the orders and the heavier the capital expenditure, the shorter the waiting period.