ONE BIG THING
A peek inside loss-making Nscale’s $35 billion IPO
Nscale, the AI data center provider, filed IPO papers with the SEC late Friday, and the S-1 contains some eye-popping numbers. The company is seeking a $35 billion valuation, according to the FT, even though it loses money.
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Nscale’s revenue for the first half of 2026 was $140.6 million, but its net loss was $1 billion. In fact, Nscale’s cost of revenue was $189.6 million, meaning that it failed to make a gross profit because the cost of providing its services exceeded the revenue it generated.
The company has never made a profit but did show a gross profit of $6.3 million in 2024 on revenues of $19.1 million. Since then, losses have expanded.
In fact, the company warns in its prospectus that management once had “substantial doubt” as to whether the company could continue as a “going concern,” which is the language companies use when they believe there is a risk of bankruptcy. Here is the disclosure:
“Management identified that the Company’s forecast funding requirements included reliance on uncommitted debt and equity financing, which initially raised substantial doubt about the Company’s ability to continue as a going concern. Management has evaluated its ability to defer, reduce or cancel capital expenditure if such financing is not obtained as forecast and has concluded that this plan is probable of being effectively implemented and, if necessary, would provide sufficient liquidity to alleviate the substantial doubt about the Company’s ability to continue as a going concern.”
The company also warns, “we will require additional capital to fund our business” in the future.
The company is not short of cash, however. On September 15, it received $3.1 billion from Nvidia in exchange for a series of unsecured convertible loan notes, the S-1 says. In addition, the company disclosed it has “remaining performance obligations” (future contracts that may or may not come good) worth $56.4 billion over the next seven years.
Here’s the executive compensation table:
- Founder and CEO Josh Payne: $23,206,898
- Chief Legal Officer Phoebee Gahan: $2,591,670
- President APAC Jing Yin: $24,731,208
- Chief Accounting and Finance Operations Officer Ron Huisman: $3,543,946
The company’s non-executive directors include former U.K. deputy prime minister and Meta vice president of global affairs Nicholas Clegg, who has been granted 917,460 shares, and former Meta COO Sheryl Sandberg, who has 1,911,420 shares.
MORE FROM FORTUNE
How Lucy Guo Became a Self-Made AI Billionaire | Fortune Daily
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The midterms are a stress test for American media – Diane Brady
Dollar General CEO says consumers making $100,000 a year don’t feel like high-income shoppers anymore as high gas prices and inflation reshape habits – Jason Ma
U.S. economy hits pivotal milestone: Spending on data centers and other information-processing hardware now exceeds housing investment – Jason Ma
Iran’s economy faces another blockade: Red tape and gridlock are clogging up land routes that bypass the U.S. Navy’s Hormuz stranglehold – Jason Ma
THE MARKETS
Bitcoin wakes up while Wall Street hits snooze
- S&P 500 futures were flat this morning. The index rose 0.17% in Friday’s session.
- In Europe, the Stoxx 600 was up 0.94% in early trading and the U.K.’s FTSE 100 was up 0.79% before lunch.
- Asia: South Korea’s KOSPI was up 1.65%. Japan’s Nikkei 225 was closed today. India’s Nifty 50 was up 0.35%. China’s CSI 300 was up 0.71%.
- Brent crude was $101 per barrel this morning.
- Bitcoin rose sharply this morning, up 5% to $84,940. Crypto bulls are excited because that puts it above its 50-week moving average.
$62 billion wave of buying preceded Fed’s rate decision
Why did the markets jump up on Thursday last week after the Fed delivered an interest rate increase? Stocks usually dislike rate hikes because they make new money more expensive to obtain. One answer is that in the week up to September 16, stocks saw an unusually large inflow of buyers into exchange-traded funds. S&P 500 ETFs received $54 billion in inflows in the period, according to Ohsung Kwon and his team at Wells Fargo. Bank of America’s Yuri Seliger estimated it at $62 billion, “the biggest inflow in 3 months,” he told clients. The Nasdaq got $28 billion in net buys and the Russell 2000 $7 billion, Wells Fargo noted.
Warsh’s words are so sparse they’re harder to parse
At just 130 words, the Fed’s policy statement last week was the shortest since 2007, according to this chart from Jared Woodard and his colleagues at Bank of America. The “return of credibility and end of ‘oversharing’ are long-term bullish for market resilience, but require higher bond risk premiums,” he told clients.
CHART OF THE DAY
Half of all newly published articles are AI-generated
AI has arrived at just the wrong time, according to these charts from Adrian Cox at Deutsche Bank. Trust in institutions has been in decline for decades, and now half of all newly published articles are AI-generated.
The stat comes from digital marketing firm Graphite, which examined a sample of more than 55,000 articles.
NUMBER OF THE DAY:
$3.6 trillion
The amount of money transacted in 176 deals between 202 companies examined by Sona Asset Management in an attempt to find out how much of the AI economy is circular. Among those deals was Amazon’s investment of about $50 billion in OpenAI and OpenAI’s commitment to buy $100 billion in “compute” power from Amazon; and Nvidia’s $100 billion investment in OpenAI, which was used by OpenAI to buy cloud services from Oracle, Microsoft, and Amazon, who in turn are among Nvidia’s largest customers for chips.
THE FRONT PAGES TODAY
Why the world’s hottest stock market is a national liability – FT
Bessent calls meeting with China Vice Premier He Lifeng ‘successful’ ahead of Trump-Xi summit – CNBC
Trump to meet with Zelensky as Russia-Ukraine attacks intensify – Axios
This man finds Hollywood blockbusters where nobody else is looking – WSJ
Merz fights for survival after record German election defeat – Bloomberg
Trump gets caught in a dilemma over a Saudi plea for military help – NYT
Presley Gerber, model son of Cindy Crawford and Rande Gerber, dead at 27 – NY Post
ONE MORE THING
Bare in mind that Sydney Sweeney owns stock in Novig
Sydney Sweeney probably doesn’t care that you’re mad at her for appearing nude in ads for sports prediction market Novig. And if she does, she’ll be crying all the way to the bank. Novig CEO Jacob Fortinsky recently revealed that Sweeney approached the company about collaborating because she wanted to become a shareholder rather than simply serve as the face of a one-off campaign, Fortune’s Camila Grigera Naón reports.
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