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Nvidia backs AI data center startup Nscale as it hits $14.6B valuation

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Re: Nvidia backs AI data center startup Nscale as it hits $14.6B valuation

#31

Post by d_burfoot »

cmiles8 wrote: post #15

This is all starting to smell like financial engineering games. Traditionally nobody in their right mind would give a startup billions to build data centers. For a long list of reasons, that’s kinda nuts. However what it does allow all these companies investing to do is fund significant capital expenditure but hide it on their balance sheet. They all know if they funded capex directly it would create a deprecation st…

The business plan makes sense to me. They are a company that is focussed specifically on building AI data centers, which is a huge part of the economy at the moment. The big cloud players know about generic data centers, but there are likely big efficiency wins to be gained by specializing on AI. There is also the geopolitical angle: European countries (and others!) will likely trust a UK-based company more than one of the American BigCos. NVidia is a great partner and investor for them: NScale will buy billions worth of NVDA chips, and also send information and learnings about the unique needs of the market to the chipmaker.

That being said, financial engineering tricks like depreciation and tax sheltering are of course hugely important in the global economy. It's likely that NVDA has a lot of cash sitting in Europe that it doesn't want to repatriate because it would have to pay taxes on it.

Re: Nvidia backs AI data center startup Nscale as it hits $14.6B valuation

#32

Post by justin66 »

doctorwho42 wrote: post #24
justin66 wrote: post #18

Earlier quoted context omitted.

Latency?

Does that even really matter with AI? If you already are waiting >1sec for a response/output, what is 0.2 seconds more?

I get what you're saying but do we really think the AI emanating from these data centers is always going to be limited to multisecond response times?

More cynically, someone in the UK might want to do something that makes money with these data centers once the AI thing goes bust.

Re: Nvidia backs AI data center startup Nscale as it hits $14.6B valuation

#33

Post by cmiles8 »

d_burfoot wrote: post #31
cmiles8 wrote: post #15

This is all starting to smell like financial engineering games. Traditionally nobody in their right mind would give a startup billions to build data centers. For a long list of reasons, that’s kinda nuts. However what it does allow all these companies investing to do is fund significant capital expenditure but hide it on their balance sheet. They all know if they funded capex directly it would create a deprecation st…

The business plan makes sense to me. They are a company that is focussed specifically on building AI data centers, which is a huge part of the economy at the moment. The big cloud players know about generic data centers, but there are likely big efficiency wins to be gained by specializing on AI. There is also the geopolitical angle: European countries (and others!) will likely trust a UK-based company more than one…

It makes sense till it doesn’t. History tells us that suppliers funding demand like this tends to end badly.

Re: Nvidia backs AI data center startup Nscale as it hits $14.6B valuation

#34

Post by prasadjoglekar »

ReptileMan wrote: post #5

Chances of this startup pulling a Theranos are? I mean data center construction is something that couple of non startup companies do and do it well. What is the problem that they solve? The article is quite light on what they actually do.

More WeWork than Theranos. Theranos was a fraud.

WeWork was a legit real estate business with a SaaS multiple on valuations.

Re: Nvidia backs AI data center startup Nscale as it hits $14.6B valuation

#35

Post by vel0city »

d_burfoot wrote: post #31
cmiles8 wrote: post #15

This is all starting to smell like financial engineering games. Traditionally nobody in their right mind would give a startup billions to build data centers. For a long list of reasons, that’s kinda nuts. However what it does allow all these companies investing to do is fund significant capital expenditure but hide it on their balance sheet. They all know if they funded capex directly it would create a deprecation st…

The business plan makes sense to me. They are a company that is focussed specifically on building AI data centers, which is a huge part of the economy at the moment. The big cloud players know about generic data centers, but there are likely big efficiency wins to be gained by specializing on AI. There is also the geopolitical angle: European countries (and others!) will likely trust a UK-based company more than one…

> there are likely big efficiency wins to be gained by specializing on AI

I've seen this suggested before as well, but I don't think I've heard a lot of actual concrete things. What big efficiency wins are to be had specializing on "AI" datacenters as opposed to what the past mega hyperscalers have done? What techniques seem to be out there that cloud providers and others have slept on? What makes them so different, in terms of operating a datacenter?

I'm genuinely asking.

Re: Nvidia backs AI data center startup Nscale as it hits $14.6B valuation

#36

Post by almyk »

surgical_fire wrote: post #16
maxdo wrote: post #4

Earlier quoted context omitted.

I think it’s lagging indicator. There were signs of saturation in the end of 2025. From 2025 to March 2026 average developer ai spent gone from $20/mo to at least $200. In my company it’s $1000-1500/mo to anthropic only. In many cases this 20x+ increase over 3 mo. This is going in other industries too. Claude cowork is just an example and beginning of the trend. Show me any product that / company that charge you 20x…

Eh? Is the average developer paying 200$ a month? I mean, I imagine some top% vibe coding bros paying 200$. I would require some serious evidence that the average developer pays for it. I certainly wouldn't. It's moderately useful, but not 200$/mo useful.

My work pays for the $200 sub for me. At work in a typical 5h slot I tend to use 35~40% of the usage limit, so the $100 sub wouldn’t let me keep my current workflow and AI usage but I am more often than not using 2x the $100 sub. We’ll see if they keep paying for this or not, because we are not yet sure if using AI like this is sustainable and worth the tech debt of moving faster

Re: Nvidia backs AI data center startup Nscale as it hits $14.6B valuation

#37

Post by empath75 »

khy34 wrote: post #26
mdrzn wrote: post #19

Earlier quoted context omitted.

People aren't paying $200 to chat, they're paying to have ClaudeCode or Cowork or Claude for Chrome do the work instead.

The question should really be what is the reservation price of existing buyers. At some point the price will rise. But the value has to have risen for existing buyers to be ok with that - but can they perceive the value? Hmmm difficult to tell. Benchmarks are not an objective way to measure that. In the long run google is most likely to acquire a serious cost advantage given their level of vertical integration.

We've been experimenting with claude code handling jira tickets and opening PR -- we're starting with Opus. It costs about $1 per PR that gets merged-- how much does it cost to have a software engineer do that PR? That's your price sensitivity. It will only get cheaper as models get more efficient and people get better at using them, though.

Re: Nvidia backs AI data center startup Nscale as it hits $14.6B valuation

#38

Post by mghackerlady »

vel0city wrote: post #35
d_burfoot wrote: post #31

Earlier quoted context omitted.

The business plan makes sense to me. They are a company that is focussed specifically on building AI data centers, which is a huge part of the economy at the moment. The big cloud players know about generic data centers, but there are likely big efficiency wins to be gained by specializing on AI. There is also the geopolitical angle: European countries (and others!) will likely trust a UK-based company more than one…

> there are likely big efficiency wins to be gained by specializing on AI I've seen this suggested before as well, but I don't think I've heard a lot of actual concrete things. What big efficiency wins are to be had specializing on "AI" datacenters as opposed to what the past mega hyperscalers have done? What techniques seem to be out there that cloud providers and others have slept on? What makes them so different,…

I know nothing about the inner workings of a large scale AI datacenter but I'd imagine the power and cooling requirements are more specialised than your average datacenter that mostly has to handle transmitting large amounts of data over the internet (not that that isn't computationally expensive, I just imagine LLMs (especially at the current scale of their deployment) are much more demanding)

Re: Nvidia backs AI data center startup Nscale as it hits $14.6B valuation

#39

Post by mghackerlady »

energy123 wrote: post #10

I don't get the economics behind building AI DCs in the UK instead of a middle income country near the equator where there's plentiful solar or fossil fuels. Labor and land is expensive, energy is scarce and expensive, and colocation is not that valuable because latency is dominated by compute instead of transmission. But there must be a good reason I am missing.

I'd imagine cooling? I could be wrong but a lot of the cost is there and putting what's effectively a megawatt scale electric heater certainly isn't going to make that any cheaper

Re: Nvidia backs AI data center startup Nscale as it hits $14.6B valuation

#40

Post by vel0city »

mghackerlady wrote: post #38
vel0city wrote: post #35

Earlier quoted context omitted.

> there are likely big efficiency wins to be gained by specializing on AI I've seen this suggested before as well, but I don't think I've heard a lot of actual concrete things. What big efficiency wins are to be had specializing on "AI" datacenters as opposed to what the past mega hyperscalers have done? What techniques seem to be out there that cloud providers and others have slept on? What makes them so different,…

I know nothing about the inner workings of a large scale AI datacenter but I'd imagine the power and cooling requirements are more specialised than your average datacenter that mostly has to handle transmitting large amounts of data over the internet (not that that isn't computationally expensive, I just imagine LLMs (especially at the current scale of their deployment) are much more demanding)

> I'd imagine the power and cooling requirements are more specialised than your average datacenter

But are they actually doing things differently than the high compute parts of the hyperscaled datacenters? Are there radical new ways of distributing heat in the datacenter that only makes sense at that level of energy usage per square foot? Is AI energy use that much higher per square foot of other high-compute parts of datacenters, or is it just that its now something like 90% of the floor plan versus maybe only 50-60%?

> handle transmitting large amounts of data over the internet

I certainly can't speak for all datacenters, and I've never been in a hyperscaler datacenter. But of all the datacenters I've spent time in, the space for the outside network connectivity was rather small compared to the rest of the space for storage and compute. Think a few small office suites dedicated to outside networks coming in and connecting to the clients in the datacenter compared to a medium to large sized warehouse full of compute and storage.

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