When neocloud Nscale goes public, it will test public investors' appetite for a stock whose revenue is tied primarily to two customers. Since its spin-out from Arkon Energy, Nscale has amassed over $103 billion worth of contracts, with 85% of that coming from a deal to supply Microsoft through 2033, and another $44.6 billion with Anthropic, contingent on Nscale hitting stringent milestones.
While customer concentration is a reminder of the interconnectedness of the AI industry, a single setback by a major player could easily ripple across the sector. Nscale plans to list on the NYSE, valued at $35 billion, and is seeking to raise $3 billion in the offering. The company reported a significant revenue increase to $140.6 million for the six months ended June 30, up from $10.4 million a year earlier, but net losses jumped to $1.02 billion from $369 million.
Nvidia provided Nscale with $1 billion in convertible debt as part of a larger $3.1 billion financing deal earlier this month. Competitors such as CoreWeave, Nebius, Lambda, and Crusoe, which raised $3.9 billion at a $30.9 billion valuation, are also in the race. Nscale operates data centers in Norway, Portugal, Texas, and West Virginia, with a board including former Meta executives and OpenAI's Fidji Simo.
As Nscale's IPO approaches, the question remains: Will Wall Street be willing to bet big on concentrated AI investments?
