Ahead of its IPO, Nscale disclosed $5.5 billion in debt, its reliance on Nvidia, and its need for cash

British cloud infrastructure provider Nscale needs additional funding: it has significantly increased its debt and is more dependent on Nvidia than previously reported, according to Bloomberg. The future of several of Nscale’s projects hinges on whether the company can raise at least $30 billion, even as borrowing costs for cloud providers continue to rise. Meanwhile, Nscale is preparing for an IPO.

As of September 30, Nscale's debt stood at $5.5 billion, compared with $137.4 million at the end of June. The company disclosed this information in its updated Form S-1 —nearly two months after it first announced its plans to go public.

Nscale has also shownsignificantdependence on Nvidia—one of its largest shareholders and a key supplier of data center equipment. Nvidia committed to providing $2 billion of the $3.36 billion in convertible financing that Nscale secured in September. Previously, Nscale had disclosed that Nvidia’s commitment amounted to only $1 billion, Bloomberg notes. However, Nscale clarified that Nvidia is not obligated to “give it priority in product allocation, preferential pricing, or early access to new products.”

Nscale also warned that it needs to secure significant additional funding to purchase Nvidia equipment that will be used at Anthropic’s facilities. Claude’s developer is its largest client: Nscale has signed a six-year, $44.6 billion contract with it. So far, Nscale has committed to investing about $1 billion in the construction of a data center in West Virginia as part of this agreement. To complete the project, it will need to secure at least another $30 billion. Anthropic has the right to terminate the contract if Nscale is unable to secure financing or complete the project within the specified timeframe.

Nscale declined to comment further, citing the documents it had already released, according to Bloomberg. There is no guarantee that Nscale will actually go public, the agency added.

The company has already commissioned facilities representing approximately $6.4 billion in contract value, out of a total contract value of approximately $106 billion. At the end of August, the value of commissioned contracted capacity stood at $2.6 billion. A significant portion of the new capacity comes from a data center in Texas, the construction of which was financed by Microsoft.

Nscale had previously faced difficulties after Microsoft decided not to use its data center in the United Kingdom. In October, the tech giant walked away from a $3.22 billion contract due to issues connecting the facility to the power grid. In addition, Microsoft decided not to exercise an option to extend its contract for leasing computing capacity in Texas. The potential value of that extension was estimated at tens of billions of dollars.

Nscale’s financial situation and its growing dependence on Nvidia highlight the risks faced by cloud providers that are rapidly expanding their computing capacity to lease to AI developers. The removal of Nvidia CEO Jensen Huang this week has raised questions about whether the chipmaker will cut funding for cloud providers amid growing investor skepticism regarding the artificial intelligence boom.

“Projected capital expenditure commitments in the short term have increased significantly,” according to Nscale’s documents. The company attributes this primarily to the need to purchase equipment. “There is no guarantee that we will be able to raise additional capital when needed or on acceptable terms,” Nscale warned.

According to Bank of America, the volume of corporate debt issued by U.S. companies involved in AI reached $655 billion as of October 22. In 2027–2028, new AI-related borrowing could approach $1 trillion. Meanwhile, on November 3, The Wall Street Journal reported that Nscale, CoreWeave, and Nebius had effectively lost access to the bond market. Lenders began demanding more favorable terms for themselves, and Nebius even had to abandon its planned issuance of high-yield bonds.

This article was AI-translated and verified by a human editor