Nscale seeks a $35bn listing with cost of revenue running $49m above revenue
The AI data centre company wants $35 billion from public markets on a first half where direct costs exceeded revenue, a $1 billion net loss and a contracted-demand total of $103.4 billion. Underwriters have yet to set a range.
The Investor · Invest desk
What happened
- Nscale filed an S-1 late on Friday to list on the New York Stock Exchange under the ticker NSCL, with Goldman Sachs, JPMorgan and Morgan Stanley leading and terms undisclosed.
- Revenue for the first half of 2026 was $140.6 million and cost of revenue was $189.6 million. The company did not make a gross profit on the services it sold.
- The net loss for the half widened to $1.02 billion from $368.9 million a year earlier, with spending on data centres, GPUs and power running ahead of billing.
- Management disclosed that reliance on uncommitted debt and equity financing initially raised substantial doubt about the company's ability to continue as a going concern.
Why it matters
- What doesn't add up contradiction Buyers weighing the deal are anchoring on a figure the underwriters have not set: Fortune has the target at $35 billion via the FT, Seeking Alpha's analysis at $30 billion.
- Who's exposed exposure More than half of first-half revenue came from one unnamed customer. Incoming public shareholders inherit a renewal decision they cannot identify, let alone monitor.
- What it costs cost The filing says Nscale will require additional capital, so further dilution or further debt is already scheduled for whoever buys the stock at the offer price.
- What it limits constraint At least $3.5 billion of compute is committed to the robotics startup Figure for equity. The trade books scarce GPU hours against a holding that has no market price.
Next story · Product · Sep 27
Nvidia supplies nearly a third of Nscale's $3.36 billion pre-IPO roundConfirmed4 publishers
Cost of revenue exceeded revenue by $49 million in the first half of 2026 [35], about 1.35 dollars of direct cost for every dollar billed [36]. The only period Nscale cleared a gross profit was 2024, when $19.1 million of revenue produced $6.3 million of it, a margin near 33 percent [22][37]. Full-year 2025 revenue was $33 million [12]. Since then the top line has grown and the gross line has turned negative.
Founder and chief executive Josh Payne, in a letter to prospective investors included in the filing, described the company as built around "an infrastructure-first thesis, building against contracted customer demand" [23]. That contracted demand appears in two sizes. Nscale put total contracted deals at $103.4 billion as of August 31, up from $38 billion at the end of 2025 [6]. The S-1's remaining performance obligations, which Fortune describes as future contracts that may or may not come good, are $56.4 billion over seven years [3]. The difference is $47 billion [32]. Spread the smaller number evenly and it implies about $8.1 billion of revenue a year, roughly 29 times the $281 million annualised rate the first half produced [31].
The price itself is unsettled. Fortune, citing the FT, reports a $35 billion target [39]; the Seeking Alpha analysis of the deal says $30 billion [40]; the filing does not include terms [4]. Against the $14.6 billion Series C that Aker ASA and 8090 Industries led in March, $35 billion is 2.4 times the private mark six months later [24][33], and about 124 times annualised first-half revenue [30]. The Seeking Alpha author, who discloses no position, calls the proposed valuation stretched against peers at a reported 22 times contracted power [27].
Cash covers the near term: the $3.1 billion of unsecured convertible loan notes Nvidia bought on September 15 is about three times the half-year net loss [2][38]. Nvidia is also in the equity, having backed the $1.1 billion Series B and joined the Series C [11]. Management wrote that it has evaluated its ability to "defer, reduce or cancel capital expenditure" if the forecast financing does not arrive, and concluded that plan is probable of being implemented [15]. Nscale has five live data centres and 12 under construction [14]. The compensation table lists four executives totalling about $54.1 million, including $24.7 million for president APAC Jing Yin and $23.2 million for Payne [17][34].
In my view the $35 billion figure gets trimmed before it trades: the last private buyers paid $14.6 billion [24], and the book now has to clear at a price set on a negative gross line [35] and a disclosed reliance on uncommitted financing [15]. The reported $45 billion, six-year Anthropic contract for the West Virginia campus was signed after the March round [9], so the private mark is stale, and a builder recognises revenue years after it spends. Either of two disclosures would sink the sceptical reading: remaining performance obligations climbing toward the $103.4 billion contracted total in a later filing [3][6], or cost of revenue dropping below revenue as the 461,000 GPUs active or under contract come online [21][14].
What to watch
- The price range when underwriters set it, and whether it lands at, below or above the $35 billion figure Fortune attributes to the FT.
- Whether remaining performance obligations in the next filing move up from $56.4 billion toward the $103.4 billion contracted total.
- Whether Lambda's talks to raise up to $3 billion at $12 billion-plus close before or after Nscale trades.
Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence76
- Adoption22
- Hype gap+34
- Incentives72
- Confidence74
Perspective Coverage
7 publishers- Builder
- Builder 12%
- Operator
- Operator 22%
- Investor
- Investor 66%
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
Nscale, an AI data centre provider, filed IPO papers with the SEC late Friday.
- [2]
On September 15 Nscale received $3.1 billion from Nvidia in exchange for a series of unsecured convertible loan notes, according to the S-1.
- [3]
Nscale disclosed "remaining performance obligations" (described by Fortune as future contracts that may or may not come good) worth $56.4 billion over the next seven years.
- [4]
Nscale filed an S-1 to list on the NYSE under the ticker NSCL, with terms remaining undisclosed.
- [5]
Goldman Sachs, JPMorgan and Morgan Stanley are leading the offering.
- [6]
Nscale's total contracted deals reached $103.4 billion as of August 31, 2026, up from $38 billion at the end of 2025.
- [7]
More than half of the $140.6 million in first-half revenue came from a single, unnamed customer, according to the filing.
- [8]
Nscale's revenue for the first half of 2026 was $140.6 million.
- [9]
Much of the jump in contracted deals traces to a reported $45 billion, six-year compute deal with Anthropic covering capacity at Nscale's West Virginia campus.
- [10]
Net loss for the six months ended June 30, 2026 widened to $1.02 billion, from $368.9 million a year earlier, as the company spent on data centres, GPUs and power faster than it could bill for them.
- [11]
Nvidia was among the backers of Nscale's $1.1 billion Series B in September 2025 and also participated in the $2 billion Series C.
- [12]
Nscale's full-year 2025 revenue was $33 million.
- [13]
First-half 2026 revenue of $140.6 million was up from $10.4 million a year earlier, growth of more than 1,250%.
- [14]
As of August 31, 2026, Nscale had 25,000 active GPUs, with another 461,000 either active or under contract, across five live data centres and 12 more under construction.
- [15]
The prospectus states: "Management identified that the Company's forecast funding requirements included reliance on uncommitted debt and equity financing, which initially raised substantial doubt about the Company's ability to continue as a going concern. Management has evaluated its ability to defer, reduce or cancel capital expenditure if such financing is not obtained as forecast and has concluded that this plan is probable of being effectively implemented and, if necessary, would provide sufficient liquidity to alleviate the substantial doubt about the Company's ability to continue as a going concern."
- [16]
The company warns, "we will require additional capital to fund our business" in the future.
- [17]
The executive compensation table lists CEO Josh Payne at $23,206,898, Chief Legal Officer Phoebee Gahan at $2,591,670, President APAC Jing Yin at $24,731,208 and Chief Accounting and Finance Operations Officer Ron Huisman at $3,543,946.
- [18]
Non-executive directors include Nicholas Clegg, granted 917,460 shares, and Sheryl Sandberg, with 1,911,420 shares.
- [19]
Nscale has committed at least $3.5 billion in compute to humanoid robotics startup Figure in exchange for an equity stake.
- [20]
Lambda is in talks to raise up to $3 billion at a $12 billion-plus valuation ahead of a possible 2027 listing.
- [21]
Nscale's cost of revenue was $189.6 million in the first half of 2026, meaning it failed to make a gross profit because the cost of providing its services exceeded the revenue it generated.
- [22]
Nscale has never made a profit but showed a gross profit of $6.3 million in 2024 on revenues of $19.1 million.
- [23]
In a letter to prospective investors included in the filing, founder and chief executive Josh Payne described the company as built around "an infrastructure-first thesis, building against contracted customer demand."
- [24]
By March 2026 Nscale had closed a $2 billion Series C led by Aker ASA and 8090 Industries, valuing it at $14.6 billion.
- [25]
Nscale's debt includes a $790 million financing for its Narvik, Norway campus, a $900 million revolving credit facility and a $3 billion debt package for GPU campuses in Texas and North Carolina.
- [26]
Payne founded Nscale in 2024 as a spinout of bitcoin miner Arkon Energy.
- [27]
Seeking Alpha's author, who discloses no position in any company mentioned, writes that at a reported 22x contracted power NSCL's proposed valuation appears stretched versus peers including CRWV, NBIS and IREN.
- [28]
The half-year net loss was about 7.3 times half-year revenue.
- [29]
Annualising first-half revenue gives a run rate of $281.2 million.
- [30]
A $35 billion valuation is about 124 times the annualised first-half revenue run rate.
- [31]
The $56.4 billion of remaining performance obligations spread evenly over seven years is about $8.06 billion a year, roughly 29 times the $281.2 million annualised run rate.
- [32]
The contracted-deals total exceeds disclosed remaining performance obligations by $47 billion.
- [33]
A $35 billion valuation is 2.4 times the $14.6 billion March 2026 Series C mark.
- [34]
The four figures in the executive compensation table total about $54.07 million.
- [35]
First-half cost of revenue exceeded revenue by $49.0 million.
- [36]
Direct cost ran about 1.35 dollars per dollar of revenue billed in the first half.
- [37]
The 2024 gross margin was about 33 percent.
- [38]
Nvidia's $3.1 billion of convertible notes is about three times the half-year net loss of $1.02 billion.
- [39]
Nscale is seeking a $35 billion valuation, according to the FT as reported by Fortune.
- [40]
Seeking Alpha's analysis says Nscale Limited is targeting a $30 billion IPO valuation with $103.4 billion in contracted backlog.
Sources
6 independent publishers whose own reporting we read for this story.
- cryptobriefing.comNscale’s contracts surge 1,000x to over $103 billion, driven by Microsoft and Anthropic
2 articles · September 21, 2026
- finance.yahoo.comMicrosoft and Anthropic dominate Nscale's $103B IPO contract backlog
1 article · September 21, 2026
- fortune.comMoney-losing Nscale’s $35 billion IPO includes a $3 billion deal with Nvidia and ‘going concern’ worries
2 articles · September 21, 2026
- qz.comMicrosoft and Anthropic dominate Nscale's $103B IPO contract backlog
1 article · September 21, 2026
- seekingalpha.comNscale: Newest Neocloud Coming Public
1 article · September 21, 2026
- techfundingnews.comNvidia-backed British AI unicorn Nscale files for Wall Street IPO after $14.6B valuation
2 articles · September 21, 2026
- techtimes.comNscale Files $30B NYSE IPO With $1B Nvidia Note and $45B Anthropic Deal
1 article · September 21, 2026
Topics and entities
Topics
- AI Infrastructure IPOs
- Circular AI Financing
- Customer Concentration Risk
- Neoclouds
- Data Centre Buildout