Nscale, a rising star in AI data center development, went public with $103 billion in contracts, 85% of which were supported by Microsoft and Anthropic.

Nscale, a UK-based AI data center developer, is seeking a US IPO. Although it holds $103 billion in contracts, about 85% of the contract value is concentrated with Microsoft and Anthropic, and some contracts have yet to secure funding.

On September 21, Bloomberg reported that in Nscale's S-1 filing, Microsoft and Anthropic contributed a combined contract value of approximately $88.4 billion, with Microsoft contributing about $43.8 billion and Anthropic about $44.6 billion. The Anthropic agreement, in particular, has not yet received formal funding commitments and is subject to a series of milestones and ongoing funding requirements. According to the Financial Times, Nscale's IPO targets a valuation of up to $35 billion.

More noteworthy is the significant gap between Nscale's current operating scale and its total contract value of $103 billion. As of the end of August, the company had only $2.6 billion in active contracts; its revenue for the first half of the year was $140.6 million, while it incurred a net loss of $1.02 billion. Whether these massive contracts can truly translate into revenue and cash flow will be key to the market's assessment of Nscale's IPO valuation.

Two major clients contribute 85% of the contract value

Nscale's contract size has expanded rapidly over the past three years, but the growth is highly dependent on two clients: Microsoft and Anthropic.

Microsoft has signed multiple agreements with Nscale since the end of 2025, totaling approximately $43.8 billion, with terms extending to 2033. Anthropic, meanwhile, signed a computing power leasing agreement with Nscale in August of this year for approximately $44.6 billion, planning to build an 8-gigawatt data center at a site in West Virginia acquired earlier this year, with the first 2 gigawatts expected to be operational in 2028.

However, this $44.6 billion contract is not yet locked-in revenue. According to the prospectus, the Anthropic agreement comes with specific milestone requirements and stringent standards for continuous computing power supply; if Nscale fails to meet these requirements, the contract may be terminated. Meanwhile, the company has not yet secured any binding commitments to finance the project.

This means that Nscale's huge contract value on paper does not equate to confirmed revenue or cash flow. The company also frankly stated in its prospectus: "The vast majority of our revenue comes from a small number of customers."

Nvidia's deep integration with supply chain and financing risks

In addition to customer concentration, the deep partnership between Nscale and NVIDIA is also noteworthy.

Nvidia is a major shareholder of Nscale and a core supplier of its data center chips, while also supporting approximately $860 million in lease obligations for Nscale. Last week, Nvidia also participated in Nscale's $3.1 billion financing round, which included $1 billion in convertible notes or non-voting shares.

This relationship means that Nscale's expansion depends not only on customer orders but also on Nvidia's funding and supply chain support. Nscale also acknowledged in its prospectus that this close relationship with Nvidia "cannot eliminate supply chain risks," and that delays in the delivery of its latest generation of AI accelerator chips may still occur.

For a company that needs to continuously invest huge amounts of capital to build data centers, there is a strong correlation between customer orders, chip supply and external financing, which also amplifies the financial pressure during its expansion.

Contract fulfillment remains uncertain, and reliance on financing is a common issue across the industry.

Forward contracts are not without the risk of withdrawal. In April of this year, OpenAI withdrew from its plans to co-develop the Stargate infrastructure project with Nscale in Norway and the UK. Subsequently, Microsoft took over the Norwegian data center project, while Alphabet's Google plans to replace OpenAI in the UK project.

This customer concentration and reliance on financing is not unique to Nscale. According to Bloomberg's estimate in March of this year, Microsoft and Meta together account for about half of Nebius' annual revenue; Microsoft accounts for about 67% of CoreWeave's revenue in 2025. Redburn, a subsidiary of Rothschild & Co., points out that these AI infrastructure companies have high leasing costs, strong reliance on debt financing, and their revenue growth is closely related to the availability of financing.

For Nscale, whether the $103 billion in contracts can ultimately be fulfilled depends on multiple factors, including financing, data center construction, and customer fulfillment. As AI infrastructure companies continue to increase capital investment, Nscale's ability to convert these massive long-term contracts into stable revenue and cash flow will be a crucial factor in the market's assessment of its potential IPO valuation of up to $35 billion.

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