According to reports, UK-based data center developer Nscale is weighing a delay of its $35 billion US listing until next year. Executives are reportedly assessing whether to pause the initial public offering that had been slated for New York soon, though no final decision has been made. Nscale filed with the New York Stock Exchange in September targeting a valuation of up to $35 billion, following an earlier funding round this year that valued it at $14.6 billion. Some investors now believe its worth may be less than half of the IPO target.

The narrowing of the listing window is not due to weak demand. Recent reports indicate that Microsoft (MSFT.US) will not exercise its option to more than double its leased computing capacity at a Texas data center under an existing agreement with Nscale. A person familiar with the matter said the potential expansion deal would have brought Nscale billions of dollars in revenue. The decision not to expand was made months ago, before Nscale filed for its September IPO, the person added, noting that the existing Texas contract between Microsoft and Nscale remains unaffected. The two companies reached their agreement last year. Under the expanded arrangement with Microsoft, Nscale was to deploy about 200,000 Nvidia (NVDA.US) AI chips across Microsoft data centers in Europe and the US.

The news came weeks after Microsoft withdrew from anchoring Nscale's flagship data center project in Loughton, Essex, because delays in power access pushed its expected power supply date into the 2030s. Nscale had stated in its IPO filing that between September 2025 and April 2026, it signed statements of work with Microsoft worth up to about $43.8 billion through December 2033, excluding optional expansion provisions. The source said Microsoft's decision not to exercise its option has no impact on the roughly $103 billion total contract value Nscale disclosed in its IPO filing. Nscale has been in talks with several major customers about the remaining computing capacity at the Texas data center, the person said.

Last month, however, reports emerged that Nscale was negotiating to sell AI computing power to Claude developer Anthropic in a potential deal valued at about $45 billion.

The listing window is being squeezed by multiple pressures. Reports indicate the direct cause of Nscale's IPO delay is a global tech stock selloff, with investor interest in AI infrastructure companies cooling noticeably. On November 5, the Nasdaq Composite fell about 5.5% in a single day, while the Nasdaq 100 dropped 6.36%, wiping out roughly $2.3 trillion in market value. On the same day, competitor CoreWeave (CRWV.US) dropped 9.83%, Nebius (NBIS.US) fell 14.94%, and Cipher Digital declined 14.62%.

But the real trigger is not the disappearance of computing demand, but a reassessment of policy variables. Democrats won both chambers of Congress in the US midterm elections and secured governorships in Texas, Ohio, Nevada, Georgia, Michigan, and Pennsylvania. Together these states account for about 45% of planned US data center capacity, with Texas alone at 25%. UBS estimates that about 30% of new US capacity by 2028 could be affected by construction pauses; New York State imposed limits on projects above 50 megawatts as early as July. There are concerns that Democrats may slow the pace of data center expansion, putting more pressure on heavily indebted AI infrastructure companies.

What supports the $35 billion valuation? First, the company's rapidly expanding asset base. As of the end of August, its operating and under-construction capacity was about 1.37 gigawatts, including 1 gigawatt of owned sites, 200 megawatts leased, and 165 megawatts hosted; it had about 25,000 GPUs in operation and about 461,000 in operation and under construction combined.

But the cost of that expansion is rising losses and leverage. First-half revenue grew 1,252% year over year, with a net loss of $1.02 billion and cumulative losses reaching $1.86 billion; in September it issued at least $3.1 billion in convertible bonds, including $2.1 billion in unsecured convertible notes.

At the same time, market benchmarks are shifting downward. CoreWeave's bond yields once exceeded 15%, and its credit default swap spreads hit record highs, as the market's pricing of new cloud companies shifts from computing narratives to contract delivery and financing costs. For Nscale, delaying the listing buys time to anchor its valuation; but the more concentrated its orders and the heavier its capital expenditure, the less time it can afford to wait.