Nscale in talks over a second $45 billion computing deal with Anthropic as AI IPO valuations come under pressure
Nvidia-backed Nscale is in talks to sell Anthropic about $45 billion of computing power from a second building at its Monarch campus in West Virginia, even as investors push back on the IPO valuations both companies are seeking.
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Nscale is in talks to sell AI computing power to Anthropic in a new deal that could be worth about $45 billion, a person familiar with the matter told Reuters on October 19. Bloomberg first reported the talks.
A second Monarch building
The data centre developer is seeking another major deal with the Claude maker for a second facility at its Monarch campus in West Virginia, the person said. In August, Anthropic agreed to spend $45 billion renting AI cloud capacity from the Monarch campus. A second Monarch building would deliver 460 megawatts of computing power using Nvidia’s advanced Vera Rubin chips, according to the source. Anthropic also has a right of first refusal on Monarch’s expected third building, the person said, adding that discussions were ongoing and details could change. Anthropic did not immediately respond to a request for comment.
Nscale has grown its total contracted value from $100 million to more than $103 billion in two and a half years and competes with Nebius, Crusoe and Lambda. Its prospectus names Microsoft and Anthropic as expected major customers. Over the weekend, however, Microsoft pulled out of a deal to anchor Nscale’s flagship UK data centre in Essex after grid connection delays pushed its expected power supply into the 2030s.
Investors push back on valuations
The talks come as investors grow more cautious about AI infrastructure listings. Bloomberg reported that Nscale has been seeking an IPO valuation of about $30 billion, while a cohort of investors has urged that a valuation of $16 billion to $19 billion would be more likely to find buyers. Nscale filed publicly for a US listing on September 18 but has not started formal marketing while it works through comments from the US Securities and Exchange Commission.
Bloomberg also said a group of investors had urged Anthropic to lower its own IPO valuation target. Reuters reported last week that, after Anthropic’s investor day, some investors were discussing a valuation of around $1.5 trillion, down from the roughly $2 trillion previously expected for its share sale, which is anticipated in November.
Debt-fuelled build-out under scrutiny
Investors have sharpened their scrutiny of companies that increasingly rely on debt to expand AI infrastructure. Last week, shares of Nscale rival CoreWeave slumped amid concerns over its $50 billion debt load, fuelling a global selloff in AI and technology stocks. A second Anthropic deal would bolster Nscale’s revenue pipeline, but would also deepen its reliance on a single customer.
Sources: Reuters (via KFGO), Bloomberg (via The Business Times) on Nscale’s IPO, Reuters (via The Business Times) on Anthropic’s IPO. Image: Reuters.
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