Nscale faces investor pushback on IPO valuation of up to $35B, Bloomberg reports
In brief
- Investors pushed back on Nscale's IPO valuation target of up to $35 billion, Bloomberg reported.
- Nscale filed its S-1 with the SEC on September 18, 2026, to list as NSCL.
- Nscale's first-half 2026 revenue hit $140.6 million; the filing showed a $1.02 billion net loss.
- Only around 2.5% of $103.4 billion in contracted value was active as of late August.
- Nvidia supplied $1 billion of Nscale's $3.36 billion in pre-IPO convertible notes.
What the filing shows
Nscale's numbers are big on both sides of the ledger. According to Nscale's SEC filing as reported by Crypto Briefing, first-half 2026 revenue came in at $140.6 million, up from $10.4 million a year earlier (a 1,252% increase). The same filing showed a net loss of $1.02 billion.
The company's looking to raise approximately $3 billion through new shares. It also reports about $103.4 billion in total contracted value, most of it tied to Microsoft and Anthropic.
As of late August, only around 2.5% of that contracted value was active.
Valuation and the pushback
Crypto Briefing put the target at up to $35 billion, though other reports place it closer to $30 billion, and neither figure has been confirmed. Nscale was valued at $14.6 billion in its Series C round in March 2026, so the top of the range is roughly 2.4 times that mark. Bloomberg reported that a number of investors were pushing back on the figure. LeoDex News couldn't independently verify that reporting.
Crypto Briefing also pointed to operational problems. Nscale's Norwegian facility was running six months behind schedule (6.4 MW operational against a 30 MW target), and Microsoft pulled out of a planned UK data center project because of difficulties securing power. Customer concentration and a heavy debt load were flagged as risks too, since Microsoft and Anthropic hold most of the backlog.
Pre-IPO money and a cooling sector
On September 25, 2026, Nscale raised $3.36 billion through pre-IPO convertible notes, according to Crypto Briefing. Third Point led the round, with Apollo, Citadel and the Abu Dhabi Investment Council participating and Nvidia contributing $1 billion. Nvidia's also expected to supply GPUs for Nscale's operations, so the chipmaker is both an investor and a supplier. The notes convert into equity at a discount to the IPO price, with conversion capped at a $30 billion valuation.
The backdrop isn't friendly. Several AI infrastructure IPOs have been canceled or postponed, and Firmus abandoned its listing plans entirely. CoreWeave, the best-known listed neocloud (a specialist provider renting out GPU computing power for AI workloads), has seen its shares fall roughly 15-25% amid the sector pullback, per Crypto Briefing's report.
Founder and CEO Josh Payne led Nscale's spinout from Arkon Energy in 2024. The board includes Nick Clegg, Sheryl Sandberg and Susan Decker.
Frequently asked questions
What is a neocloud?
A neocloud is a specialist provider that rents out GPU computing power for AI workloads. CoreWeave is the best-known listed example, and its shares fell roughly 15-25% during the recent pullback in the sector, according to Crypto Briefing.
How do Nscale's pre-IPO convertible notes work?
Nscale raised $3.36 billion through pre-IPO convertible notes on September 25, 2026. The notes convert into equity at a discount to the IPO price, and conversion is capped at a $30 billion valuation. Third Point led the round, and Nvidia put in $1 billion.
Why are investors hesitant about Nscale's IPO valuation?
Bloomberg reported investor pushback on a target of up to $35 billion, about 2.4 times Nscale's $14.6 billion Series C valuation. The filing showed a $1.02 billion net loss, and only around 2.5% of its $103.4 billion contracted value was active as of late August.
