How Nscale’s Unbuilt Data Centers Undercut Its $35 Billion IPO Pitch

AI chip rental business Nscale, which has filed paperwork indicating its plan to go public, is a puny, relatively new entrant in the neocloud race. At first blush, it looks to hold a lot of promise, posting rapid growth in the past year and boasting a backlog of contracted revenue on par with that of older rival CoreWeave.

But nearly all of Nscale’s $103 billion in contract commitments rely on data centers it hasn’t yet built—or even raised all the money needed to build. The company hasn’t secured the Nvidia chips it needs to fulfill those future contracts. That makes Nscale a symbol of the risks inherent in the AI boom. It also suggests the $35 billion valuation for which it is reportedly aiming in its initial public offering looks far too rich. The right valuation is probably less than half that.