Artificial intelligence cloud company Nscale is reportedly facing pushback from investors to its IPO valuation target.

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Some backers are balking at the company’s initial public offering (IPO) goal of around $30 billion, instead suggesting a range of $16 billion to $19 billion, Bloomberg News reported Sunday (Oct. 18).

The report, citing sources familiar with the matter, said the IPO is facing challenges including the valuation disconnect and a cancelled data center deal with Microsoft. Investors are also taking into accounts the collapse of Australian data center company Firmus’ IPO plans, sources said.

Nscale is also working through comments from the U.S. Securities and Exchange Commission (SEC) on its filing, with discussions still happening ongoing and no decisions having been made, the report said.

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Microsoft said Sunday that it was pulling out of the data center agreement with Nscale, citing delays related to power constraints, the report added.

Sentiment around AI infrastructure companies such as chipmakers and cloud computing firms has soured as borrowing costs have increased and uncertainty over the technology’s long-term payoff has grown, Bloomberg said.

As covered here in July, the five companies spending the most on AI data centers in the United States — Alphabet, Amazon, Meta, Microsoft and Oracle — doubled their debt load over the last five years to support their efforts.

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