Nvidia in talks to invest in Firmus after IPO flop

Nvidia ↗ 2.54% is in talks to invest hundreds of millions of dollars in Firmus Grid, an Australian AI cloud company that dropped its planned initial public offering earlier this month, The Information reported on Tuesday, October 20, citing people familiar with the talks. The news site said the discussions suggest Nvidia will keep backing neoclouds, a struggling group of AI cloud providers that carry heavy debt, Bloomberg reported.bloomberg.com+1

No deal has been confirmed. The size and terms of any financing have not been made public, Investing.com noted. Nvidia already owns about 7% of Firmus, according to The Telegraph. The Telegraph said it had asked both companies for comment.telegraph.co.uk+1

A shelved A$44 billion listing

Firmus pulled a planned A$5 billion ($3.3 billion) IPO this month after investors raised concerns about its valuation, its funding needs and its short operating history, Investing.com reported. The offering aimed for a valuation of about A$44 billion, close to three times the value set in its August funding round. The company blamed "recent market volatility and prevailing market conditions" for the cancellation, The Telegraph reported. The Australian newspaper separately reported that Firmus wants more money from Nvidia as it pursues a private capital raise.telegraph.co.uk+1

Shares of MAAS Group rose about 5% on Wednesday, October 21, while the S&P/ASX 200 was little changed. MAAS owns a 3.2% stake in Firmus and holds construction contracts tied to its data-centre buildout. The scrapped IPO had weighed on MAAS shares, Investing.com reported.in.investing.com

Neoclouds under pressure

The talks come as investors lose confidence in AI-focused data-centre operators because their borrowing costs keep climbing. Nvidia has been called the "central bank of AI" because it has funded dozens of companies that also buy its chips, The Telegraph reported. NextDC shares fell more than 40% on Wednesday after the company said a project had been delayed. CoreWeave ↘ 0.50% shares have dropped more than a quarter over the past month, and yields on its debt have soared. Nvidia chief executive Jensen Huang said last week that the company did not need saving.telegraph.co.uk

The Telegraph also reported that Nvidia plans to invest $1 billion in British neocloud Nscale next month. That money would come as equity if Nscale has gone public by then, or as convertible debt if its planned US listing does not happen. Separately, Microsoft ↗ 0.20% withdrew from a deal for Nscale's data centre in Essex.

Citadel founder Ken Griffin said on Tuesday that markets were "almost certainly" in an AI bubble. "Any radical transformation of our economy is generally intertwined with a bubble," he said at a conference in New York, according to The Telegraph.telegraph.co.uk