Nscale, a neocloud startup spun off from Australian crypto miner Arkon Energy two years ago, is preparing to go public in a move that may reveal how eager investors are to back AI firms with revenue hinged on just a few major clients. Its IPO filing shows over $103 billion in supply contracts, but nearly 85% of that amount is tied up in deals with only two customers. One major contract, valued at $43.8 billion, runs through 2033 with Microsoft, while another $44.6 billion deal is with AI research lab Anthropic—though the latter depends on Nscale securing financing and meeting what are described as “stringent” milestones.
That structure—revenue heavily concentrated in a couple of clients—underscores how much interconnectedness now defines the AI infrastructure space. A recent report from a credit hedge fund found many companies in the sector have similar dependency. For instance, CoreWeave pulls two-thirds of its revenue from Microsoft. Another company, Applied Digital, gets 67% of its revenue from Oracle and roughly 30% from CoreWeave. Analysts warn that such risks aren’t inherently bad, but a shift in strategy by a dominant partner can ripple through smaller firms in the network and destabilize the broader ecosystem.
In its IPO, Nscale aims for a valuation of about $35 billion and plans to raise $3 billion in capital. Recent financials spotlight rapid growth: revenue for the six months ending June 30 totaled $140.6 million—up markedly from $10.4 million in the same stretch last year. But those gains come with mounting losses; Nscale posted a net loss of $1.02 billion, nearly triple its $369 million loss from a year earlier.
Backed by major players like Nvidia—whose recent support includes a $1 billion convertible debt commitment—Nscale also raised earlier rounds that valued it at $14.6 billion, led by investors such as Aker ASA and 8090 Industries. It competes with firms like CoreWeave, Nebius, Lambda, and Crusoe. The latter just announced a massive $3.9 billion raise at a valuation over $30 billion.
Nscale’s footprint & leadership
Nscale operates high-performance AI data centers in several locations: Norway, Portugal, Texas, and West Virginia. Its board is packed with heavyweights who bring global tech and AI credibility: among them are former Meta executives Sheryl Sandberg and Nick Clegg, plus ex-OpenAI exec Fidji Simo.
The IPO will offer a real test of investor appetite not just for AI startups broadly, but for those with high revenue dependency on a few large contracts. If successful, it could fuel more capital flowing into megadeals in AI infrastructure—but failure or weak performance might lead to a reassessment.
Why this matters: Nscale’s IPO isn’t just about one startup going public—it reflects a larger trend in AI infrastructure. More firms are signing blockbuster deals with giants like Microsoft and Anthropic, but those relationships can be volatile. Investors will be closely watching whether the risk of customer concentration undermines valuation or spooks the market. For Nscale, its future depends on delivering on its expansive deals, meeting the required milestones, and expanding its revenue base. What happens here could rewrite the playbook for how AI infrastructure gets financed going forward, and recalibrate how Wall Street values concentrated bets in this space.
