The listing plans of Australian data center company Firmus Grid suddenly faced weakening demand, sounding a warning bell for the red-hot AI infrastructure financing market.

On October 8, according to Bloomberg, Firmus failed to secure sufficient subscriptions at its target price of A$11 per share. Just days earlier, the company had said subscription interest far exceeded the offering size, with a valuation once aiming at US$30 billion. This sharp reversal highlights that investors are beginning to re-examine the high valuations and capital-intensive models of AI infrastructure companies.

Firmus's share price turmoil quickly spread to related parties. Maas Group, which holds a stake in Firmus, plunged as much as 30% during Thursday's Sydney session, marking its largest single-day drop on record, before closing down 22%. Maas Group acknowledged that the market currently has "a lot of speculation and commentary about whether the IPO can proceed."

The company originally planned to raise about US$5.5 billion through the IPO and list at a valuation approaching US$30 billion, but after closing the order book, it delayed announcing the final pricing and deal structure. Market participants expect the issue price may be forced down, and a shelving of the deal cannot be ruled out.

Valuation surge far outpaces business expansion, investors begin to question growth room

The core problem facing Firmus is that its valuation has risen far faster than its business expansion.

According to reports, the company was valued at about US$10.5 billion when it completed a funding round in early August, with investors including Jane Street and Blackstone; just two months later, its IPO target valuation had approached US$30 billion.

But Firmus's actual operating scale remains limited. The company's fiscal 2026 revenue is only US$51 million, it currently operates two data centers, and its built capacity is only 46 megawatts; although its planned data center pipeline reaches 912 megawatts, most projects have yet to be built.

Firmus plans to use IPO proceeds to expand AI data centers in Asia, with customers including Meta and OpenAI, and hardware from shareholder Nvidia. This means the company's current valuation depends heavily on future project delivery and continued financing.

According to reports, investors are mainly concerned about the company's lack of a large-scale operating record, its high valuation, and the potential selling pressure from about 58% of shares becoming freely tradable after listing. In addition, the regulatory and financing environment for the data center industry is also tightening.

Institutional investors: the AI story holds, but this price is hard to accept

Institutional investors have begun to clearly express doubts about the valuation.

UniSuper, one of Australia's large pension funds, decided not to participate in the IPO. Its chief investment officer John Pearce said Firmus "does have a fascinating story," but "the valuation is not fascinating." He believes that for the company to justify this valuation, too many conditions would need to fall into place at the same time, and expansion would still depend on continuous debt and equity financing.

Jun Bei Liu, co-founder of Ten Cap Investment, said the IPO faces "a lot of investor skepticism," with the core issue being that Firmus "has not yet built a large number of data centers." Phil Wool, head of portfolio management at Rayliant Global Advisors, said Firmus had been expected to become one of Australia's largest IPOs, so this setback constitutes a "historic failure."

The AI financing boom begins to face a higher threshold

Firmus's predicament is not an isolated case. Bloomberg previously reported that data center company Accelevation Holdings priced below its earlier marketed range when it listed in the United States last month, showing that investors are raising their valuation requirements for AI infrastructure assets.

At the same time, some popular trades in the AI supply chain have also begun to cool. South Korea's KOSPI has fallen 27% since its June peak, and the memory chip rally previously led by Samsung Electronics and SK Hynix is clearly under pressure.

Warnings about an AI valuation bubble are also growing. Ray Dalio said this week that AI is a "classic bubble," and that massive debt financing and high interest rates are increasing the risk of a burst. "Big Short" investor Michael Burry compared the current stock market environment to 2000 and 2008.

The bigger question is how much future revenue the AI industry needs to absorb current investment. Bain estimates that by 2031, the AI industry will need to generate US$6 trillion in annual revenue to justify the capital currently being invested in data center construction.

Meanwhile, some AI cloud computing companies are turning to high-cost debt financing. JPMorgan, while serving as a joint lead underwriter for Firmus's IPO, is also marketing a US$5 billion leveraged loan at an interest rate of about 11% for Volta Infrastructure Holdings for its Norway data center project.

Capital demand remains huge, but IPO risk is rising

The capital demand for AI infrastructure has not disappeared because of the cooling IPO.

KKR estimates that completing global AI infrastructure construction may require about US$8 trillion; Anthropic is reportedly likely to launch a large-scale IPO as soon as next month. But the attitude of capital markets is changing: investors are no longer granting high valuations based solely on the AI growth story, and are instead beginning to require companies to prove that revenue growth, project delivery, and financing capacity can match capital investment.

Wool warned that as enthusiasm for the AI theme peaks, investors are starting to recalculate how much future growth is needed to make the large-scale financing of recent years financially coherent. "This will not be the last disappointing AI-related IPO."

Firmus was founded in 2019 by Oliver Curtis, Tim Rosenfield, and Jonathan Levee, originally starting from a Bitcoin mining machine business. The joint lead underwriters for the IPO include JPMorgan, Bank of America, Morgan Stanley, and Morgans Financial.