Welcome to Eye on AI. Beatrice Nolan here. In today’s issue:
Another day, another billion-dollar IPO.
This time it’s Nscale, the Nvidia-backed “neocloud” that filed for a New York listing last week at a valuation of up to $35 billion, according to the Financial Times.
Nscale is a two-year-old neocloud—a type of company that builds or finances AI-ready data centers and rents out the computing power. It’s headquartered in London and run by founder and CEO Josh Payne. It was spun out of the Australian crypto miner Arkon Energy in 2024. It has since recruited a board that includes former Meta COO Sheryl Sandberg, former U.K. deputy prime minister Nick Clegg, and former Yahoo president Susan Decker.
Per the S-1, the company 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 I profiled the company back in June, there were already serious questions about the company’s 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.
Also front and center in the S-1 are the company’s deep links to Nvidia. Nvidia 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 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.
In a way, Nvidia has been pretty open about the fact that it’s propping up companies like Nscale. Back in April, Nvidia CEO Jensen Huang said this, 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 we’ve seen before 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 are buying data center capacity from the neoclouds. In that case, it’s all Nvidia’s money just passing from one place to another. The rest of us are left trying to work out how much of the AI boom’s growth is real demand versus one company’s balance sheet talking to itself.
Coreweave may foreshadow Nscale’s IPO fate
CoreWeave is probably our best point of reference for how this IPO may go. Similarly, 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.
While we’ll have to wait and see how this listing goes for Nscale, there is a question about whether the market is still in the same place as when CoreWeave went live in March 2025.
Earlier this month, 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 rapid build-out Nscale is relying on. There is also a question of how many loss-making, billionaire-dollar companies the market is going to tolerate. 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’s 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.
With that, here’s more AI news.
Beatrice Nolan
[email protected]
@beafreyanolan
Before we get to the news: One question we here at Fortune keep returning to as agentic AI accelerates: Which companies are finding ways to successfully deploy AI agents at scale and in ways that provide significant business value? And which are just playing around with pilots?
On Oct. 6, from 11–12:00 p.m. ET, Fortune AI editor Jeremy Kahn will explore that question with AI and technology leaders from AXA, Mistral AI, Mastercard, and Accenture during the virtual Fortune Brainstorm AI session, The Agentic Era: Are Enterprises Keeping Up? We’ll look past the demos to discuss the operational realities of data, security, governance, human oversight, and ROI. Join us for the conversation.
FORTUNE ON AI
How ‘Effective Altruism’ went from fringe philosophy to Trump’s AI villain — By Beatrice Nolan and Emily Forlini
What AI slowdown? OpenAI, Anthropic release dueling models as price wars heat up — By Emily Forlini and Beatrice Nolan
AI could make more companies worth hacking, Anthropic report suggests — By Wen Shao
OpenAI’s agent hacked Australia’s Medicare website—the latest rogue AI incident that the company didn’t know about for months — By Emily Forlini
AI IN THE NEWS
Trump allies target Anthropic’s Dario Amodei over AI “doomerism.” President Trump’s allies are going after Anthropic CEO Dario Amodei, casting him as the face of AI “doomerism” and effective altruism (EA), according to Axios. A memo circulating inside the White House this week calls EA a “fringe, cultish collective” that “built the AI-doom pipeline” and ties the movement to veganism and animal-welfare causes it presents as out of step with American interests. The memo doesn’t link those positions to Amodei directly, but one source told Axios that Amodei “is the embodiment of an ideology” opposed to Trump’s America First agenda. Anthropic has long distanced itself from EA; President Daniela Amodei has said she doesn’t “identify with that terminology.” The attacks come as Anthropic prepares for what’s expected to be a record-setting IPO. Read more in Axios. Also Emily Forlini and I looked at Trump’s decision to attack EA in the hopes of turning the public against AI regulation in this story out earlier this week.
Google says Gemini 4 is coming soon. Google is close to releasing Gemini 4, its next flagship AI model, Google DeepMind chief Koray Kavukcuoglu said at The Information’s AI Agenda Live summit on Wednesday. In his first public appearance since taking over DeepMind, Kavukcuoglu said the model is in early post-training with “promising results” and that Google plans to roll out an early version “as soon as possible,” well before the end of the year. He did not, however, give a firm date. The launch comes as Google has fallen behind Anthropic and OpenAI in the frontier model race. Read more in The Information.
Altman and Amodei urge the UN to cooperate on AI safety. OpenAI CEO Sam Altman and Anthropic CEO Dario Amodei spoke separately to the UN Security Council on Wednesday, calling for international cooperation on AI safety. Altman pushed for shared global standards for measuring AI capabilities and assessing risks, plus secure channels for governments to share threat information, so the world “can learn from failures before they become catastrophes.” Amodei called AI “the most important global security issue” and laid out a three-step plan: start with narrow bans, such as prohibiting the use of AI to develop biological weapons, then set up systems to verify that countries keep their commitments, and adopt common testing standards with required reporting of serious AI incidents. The appeal clashes with President Trump, who used his UN speech to dismiss international AI oversight as a “globalist scheme.” Read more in Bloomberg.
Claude agents discover a new enzyme system. Anthropic says a swarm of Claude agents helped find a previously unknown biological system in bacteriophages, the viruses that infect bacteria. About 950 agents spent 21 hours searching a huge DNA sequence database and sifted more than 200,000 reverse transcriptases down to 20 strong candidates. One agent spotted repeating DNA patterns next to an unusual reverse transcriptase gene. Anthropic calls the result “array-associated reverse transcriptases” (ART): three parts, including repeat arrays that look like CRISPR arrays. Human scientists did all the lab work confirming the find, and what the system does is still unknown. CRISPR pioneer Feng Zhang of MIT and the Broad Institute called it “an exciting example of how AI agents can contribute to biological discovery.” Read more from Anthropic.
EYE ON AI NUMBERS
69%
That’s the share of Chinese-origin elite AI researchers who now end up working in China, according to a new study from Carnegie China. In 2022, the figure was 57%. The researchers who put the report together, Damien Ma and Binyi Yang, tracked the careers of more than 10,000 authors of papers accepted at NeurIPS, one of the field’s top conferences. They found that China is keeping far more of its homegrown talent than in previous years. Their explanation is that China’s own AI industry now offers better job prospects, while tighter U.S. visa rules have made it harder for Chinese researchers to come to the U.S.
It’s resulting in a big shift in where top AI researchers work globally. China is now home to 41% of the elite AI talent in the sample, up from 27% in 2022. The U.S. share fell from 46% to 34%. Chinese-origin researchers, meaning those who did their undergraduate degrees in China, now make up 57% of the talent pool in the study.
The U.S. isn’t losing the talent race outright. It still keeps 89% of the researchers who did their undergraduate degrees there, well above China’s 69%, and had a net gain of 2,145 researchers in 2025. China had a net loss of 1,729. But the imbalance between the two countries is narrowing. The study now counts 30 Chinese-origin researchers working in the U.S. for every U.S.-origin researcher working in China, down from 46 to one in 2022.
AI CALENDAR
Nov. 16-17: Fortune 500 Innovation Forum, Detroit. Apply here to attend.
Dec. 6-12: Neural Information Processing Systems (Neurips) conference. Sydney, Australia.
Dec. 7-8: Fortune Brainstorm AI, San Francisco. Apply here to attend.
