DayOne Data Centers Ltd. is reviewing its choices for a US initial public offering, including a possible postponement or a reduction in size, as instability surrounding data centers grows, according to people familiar with the situation.

Although the Singapore-based company has been waiting for the right moment to proceed with the IPO, it has also been weighing the chance of delaying the share sale until the market improves, the people said. Other alternatives include moving ahead with a smaller listing that could raise $2.5 billion to $3 billion, about half of its original target, the people said.

DayOne, whose supporters include Coatue and Hillhouse, is still engaging with potential investors and remains eager to move forward as soon as the market permits, the people said. The company had initially considered raising as much as $5 billion from the listing as early as the fourth quarter, people familiar with the matter said earlier. It had been targeting a valuation of about $20 billion, the people have said.

Discussions are still underway and DayOne has not made any final decisions, the people said, requesting anonymity because the information is confidential. The company could still choose to proceed with the offering in the coming weeks, according to the people. DayOne declined to comment.

While data centers have attracted global investor demand during a boom in artificial intelligence-related sectors, a more negative mood has begun to spread through IPOs. DayOne has been raising billions of dollars in private funding rounds as it seeks capital to expand its pipeline.

Australian data center company Firmus Grid Ltd. withdrew its roughly $5 billion IPO when investors resisted the valuation it sought, while AirTrunk, which also operates data centers, postponed a planned real estate investment trust IPO in Singapore to next year.

South Korean digital infrastructure company Elice Inc. fell 32% in its Seoul trading debut on Tuesday. Coreweave Inc.'s shares have more than halved since their May peak, and Nscale Ltd. is encountering resistance over its target IPO valuation, Bloomberg News has reported. On Wednesday, shares of Australian data center operator Nextdc Ltd. dropped sharply after it cut earnings guidance.

Some investors are hoping that the recent market volatility will fade after the US midterm elections on Nov. 3. They are also watching the performance of Anthropic PBC's upcoming listing as a key measure of sentiment toward the AI sector.

DayOne filed for a US IPO earlier this month. The offering is being led by Morgan Stanley, JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. IFR reported Monday that DayOne was collecting more investor feedback before launching the share sale.

DayOne is operating or developing data centers in Singapore, Malaysia, Indonesia, Thailand, Hong Kong, Japan, Finland and Spain. Other backers include GDS Holdings Ltd., the SoftBank Vision Fund and Citadel's Ken Griffin.