Nscale raises $3.36B to expand AI data center buildout

Nscale Ltd. said it has secured $3.36 billion in financing to support a broader push to build artificial intelligence data centers, with the money set to arrive in two parts ahead of the company’s planned initial public offering.

The company said $2.26 billion is expected in the near future from a consortium that includes Third Point, Apollo, Citadel and more than a dozen other institutional investors. Nvidia Corp. is set to provide the remaining $1 billion in mid-November.

"This marks a milestone for Nscale as we continue scaling our full-stack AI infrastructure to meet unprecedented global demand", said Nscale founder and Chief Executive Officer Josh Payne. "With the backing of these world-class investors, we are strongly positioned to accelerate our data center buildouts globally."

Nscale is raising the funds through convertible notes, which are short-term debt instruments that investors can exchange for stock. According to the company, those notes will convert into shares immediately after its forthcoming initial public offering. The company reportedly hopes to raise $3 billion at a $35 billion valuation.

A major part of Nscale’s pitch to investors is the more than $103 billion in total contracted value, or TCV, on its books. The company has said TCV forecasts future revenue from data centers and that it expects most of that revenue to come from contracts with Microsoft Corp. and Anthropic PBC.

Expansion strategy

Nscale says it uses a vertically integrated approach to building AI data centers, handling the design and construction of both the facilities and the supporting power infrastructure.

In West Virginia, the company is building an AI campus with an on-site microgrid that it says will be able to generate 2 gigawatts of power when it comes online in early 2028. Nscale also plans to install energy storage infrastructure there to help offset potential fluctuations in the microgrid’s generation capacity. According to the company, the West Virginia campus will not draw electricity from the public grid.

Beyond that site, Nscale’s network includes 16 other campuses. The company owns five of them, while partners operate the rest. Its IPO prospectus says the construction strategy focuses on locations where electricity prices are often "approximately 70% lower than major U.S. power markets."

Software and acquisitions

Software development is also part of Nscale’s technical roadmap. Last month, the company said it built an AI tool designed to automatically troubleshoot issues in its graphics card clusters. When a server needs physical repairs, the software identifies which specific part needs fixing and how.

In June, Nscale acquired Anyscale Inc. for $1.65 billion to strengthen its software capabilities. The deal added a platform aimed at improving the efficiency and reliability of AI clusters. The source article said it is possible Nscale will use some of the proceeds from the new financing to make additional acquisitions.

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