Nscale Considers IPO After $14B Microsoft Agreement

Nscale, the London-based AI cloud infrastructure provider, is considering an initial public offering, the company confirmed to CNBC on Wednesday, coinciding with the announcement of a significant $14 billion deal with U.S. tech titan Microsoft.

Josh Payne, Chief Executive of Nscale, told the Financial Times that the company, which specializes in providing scalable technology infrastructure for artificial intelligence, has “public market ambitions” with a potential listing in the “back end of next year.”

While a company spokesperson declined to comment on the specific exchange Nscale is eyeing, the IPO plans underscore its rapid growth and the booming demand for AI infrastructure.

The announced “expanded partnership” with Microsoft will see Nscale receive $14 billion, according to the FT’s initial reporting, which CNBC has since verified. This deal, coupled with previously announced projects, puts the total agreement value with Microsoft at around $23 billion, based on CNBC’s calculations. The core of the deal involves Microsoft procuring approximately 200,000 Nvidia GB300 graphics processing units (GPUs) from Nscale, indicating a strategic move to bolster its AI computing capabilities.

The magnitude of this deal highlights the critical role of specialized infrastructure providers like Nscale in enabling the development and deployment of advanced AI models. Microsoft’s significant investment signals its commitment to securing access to cutting-edge hardware and infrastructure, solidifying its position in the competitive AI landscape.

This announcement arrives on the heels of Nscale’s recent $433 million funding round, which itself followed a $1.1 billion financing – reportedly the largest Series B round in Europe. Nscale’s impressive list of existing investors includes technology powerhouses Dell, Nvidia, and Nokia, alongside asset manager Blue Owl Managed Funds. Their backing further validates Nscale’s technological prowess and market potential.

Founded in 2018, Nscale’s rapid ascent reflects the intense fervor surrounding AI and the global race to build robust and scalable infrastructure. This surge in investment and valuation has sparked debate about a potential “AI bubble” in both public and private markets. However, Nscale remains optimistic, emphasizing the growing need for its services. “We’re always in touch with investors about future opportunities,” a company spokesperson stated, suggesting a continuous pursuit of strategic collaborations and capital to fuel its expansion.

Analysts suggest that Nscale’s potential IPO could be a significant event for the European tech scene, potentially attracting substantial investment and further legitimizing the region’s emerging AI ecosystem. Furthermore, Nscale’s focus on sustainable and efficient AI infrastructure could appeal to environmentally conscious investors, aligning with the growing trend of ESG investing.