Nscale, the Nvidia-backed "neocloud" that builds and rents out AI-ready computing capacity, has filed for a New York listing at a valuation of up to $35 billion, according to the Financial Times. The filing, made last week, sets the two-year-old company on a path toward the U.S. public markets despite the heavy losses disclosed in its registration documents.

What Nscale does

Nscale is a neocloud — a type of company that builds or finances AI-ready data centers and rents out the computing power inside them. Headquartered in London, it is run by founder and CEO Josh Payne and was spun out of the Australian crypto miner Arkon Energy in 2024. Since then, the company has recruited a board that includes former Meta COO Sheryl Sandberg, former U.K. deputy prime minister Nick Clegg, and former Yahoo president Susan Decker.

Heavy losses, outsized valuation

Per the S-1, Nscale posted a net loss of $1.02 billion in the six months to June 30, 2026 — and at one point, its own management flagged "substantial doubt" about its ability to continue as a going concern. When Fortune profiled the company in June, there were already serious questions about its losses running wildly ahead of its revenues. The new filings show the extent of them.

Despite those losses, Nscale is asking Wall Street to value it at as much as $35 billion, on the promise that $103 billion in contracts — much of them not yet firm — will turn into revenue on schedule. That makes the conversion of those contracts into actual revenue, alongside the company's ability to fund its expansion, central issues for public-market investors assessing the offering.

Deep links to Nvidia

Also front and center in the S-1 are the company's deep ties to Nvidia. The chipmaker is Nscale's biggest supplier, one of its investors, and — depending on how the IPO prices — soon to be one of its largest shareholders. On Sept. 15, Nscale signed a subscription agreement for a $3.1 billion financing round, of which Nvidia itself is taking $1 billion in convertible notes or non-voting shares.

Previous filings from Nscale's own U.K. company accounts, published in October 2025, showed that Nvidia bought warrants for over 157,945 Nscale shares for $60 million — and in exchange agreed to guarantee up to $860.3 million of Nscale's lease obligations at a facility in Ward County, Texas.

Nvidia has been fairly open about the fact that it is propping up companies like Nscale. Back in April, Nvidia CEO Jensen Huang said, referencing both Nscale and CoreWeave, another neocloud company:

"If we didn't support CoreWeave to exist, these neoclouds, these AI clouds, wouldn't exist… If we didn't support Nscale, they wouldn't be where they are today."

But the extent of Nscale's reliance on Nvidia raises questions about circular financing. The chipmaker is providing funding — in the form of investment, loans, or loan guarantees — to customers who are turning around and sending money back to it in the form of GPU purchases. In some cases, Nvidia is also investing in the AI companies that buy data center capacity from the neoclouds, meaning the money simply passes from one place to another. In effect, some of the revenue flowing through the AI supply chain originates as Nvidia's own capital. That leaves outside observers trying to work out how much of the AI boom's growth reflects real demand, and how much is one company's balance sheet talking to itself.

CoreWeave may foreshadow Nscale's IPO fate

CoreWeave is probably the best point of reference for how this IPO may go. CoreWeave posted an $863 million net loss in 2024 — the last full year before its March 2025 IPO — as disclosed in its own S-1. The company also disclosed in that same filing that two customers, Microsoft and a second buyer widely reported to be Nvidia itself, made up 77% of its revenue.

Still, despite a shaky debut — CoreWeave priced below its range and closed flat on day one — the stock went on a huge run, more than doubling within months.

Whether the market is still in the same place as when CoreWeave went live in March 2025 remains an open question. Earlier in September, a warning from Anthropic's Dario Amodei about the pace of AI development — echoed by Sam Altman and Elon Musk — helped wipe close to 6% off the semiconductor index in a single session, alongside a spike in Treasury yields that made investors less patient with unprofitable growth stories generally.

Community and political pushback against data centers has intensified globally, with some politicians proposing various bans on the kind of rapid build-out Nscale is relying on. There is also a question of how many loss-making, billion-dollar companies the market is going to tolerate.

A test case for the AI IPO queue

Nscale is also getting ahead of companies like Anthropic and OpenAI in the IPO queue. Going first may mean Nscale helps to test the waters for later listings by the frontier AI companies. If the neocloud prices well, it sets a valuation benchmark and a tailwind for the much bigger listings expected from Anthropic later this year and OpenAI sometime in early 2027. If Nscale stumbles, it is a much cheaper way for Wall Street to find out where the AI infrastructure story breaks than waiting for a trillion-dollar name to test it first.

More from Fortune's Eye on AI

The story appeared in Fortune's "Eye on AI" newsletter, which also pointed readers to coverage of how "Effective Altruism" went from fringe philosophy to "Trump's AI villain," Google's announcement that Gemini 4 is coming soon, calls by Sam Altman and Dario Amodei for the UN to cooperate on AI safety, and China edging ahead in the global AI talent war. The newsletter also promoted a virtual Fortune Brainstorm AI session, "The Agentic Era: Are Enterprises Keeping Up?," scheduled for Oct. 6 from 11 a.m. to 12 p.m. ET, in which Fortune AI editor Jeremy Kahn will explore enterprise adoption of AI agents with leaders from AXA, Mistral AI, Mastercard, and Accenture.

The article was written by Beatrice Nolan (beatrice.nolan@fortune.com, @beafreyanolan) and was originally featured on Fortune.com.