Australia’s Firmus Withdraws IPO as A$44 Billion Valuation Stokes AI Overvaluation Fears
Summary
- Australian data-center operator Firmus withdrew its IPO plans after investor demand fell short of its targeted valuation of about A$44 billion.
- Concerns are mounting over AI infrastructure company profitability and funding costs, highlighted by CoreWeave’s sharp share-price drop, $35.6 billion in total debt, and a rise in bond yields to 15%.
- Steve Eisman said this year’s AI-related debt financing of $500 billion and the use of off-balance-sheet financing are risk factors, adding that investors should be wary of rich valuations based solely on the 'AI company' label.
Forecast Trend Report by Period
Australian data-center operator Firmus has withdrawn plans for an initial public offering as debate intensifies over stretched valuations for AI infrastructure companies. Investors are also growing more wary that expectations for AI-related growth are running too far ahead of actual revenue and profitability.
According to industry sources on October 19, Firmus halted its planned listing on the Australian Securities Exchange this month. The company had targeted a valuation of about A$44 billion, but investor demand reportedly fell short.
Firmus runs AI data-center operations in Australia and elsewhere in Asia and is known to have received investment from Nvidia. Even so, the company currently has only two operating data centers, and its revenue for fiscal 2025-2026 is projected at about $50.8 million, fueling criticism that the valuation was excessive.
Concerns are also mounting over profitability across the broader AI infrastructure sector. Shares of U.S. AI cloud company CoreWeave plunged 15% in a single day last week. As of the end of June, the company had total debt of $35.6 billion, while the market yield on bonds it issued in June rose to about 15% recently from roughly 9.675% at the time.
Investors are increasingly focused on whether the huge amounts of capital pouring into the AI industry will ultimately translate into real cash flow and profits. Higher funding costs are also raising fresh doubts about the economics of data centers and AI infrastructure businesses.
The valuations of major AI companies including Anthropic and OpenAI have also become a source of debate. Anthropic is reportedly seeking a valuation of about $2 trillion as it pursues a U.S. stock-market listing, despite posting an operating loss of more than $8 billion last year. OpenAI, which is also preparing for an IPO next year, is being discussed at a valuation of about $1.4 trillion.
Steve Eisman, the investor known as one of the real-life figures behind the film “The Big Short” after betting against the U.S. housing market during the 2008 financial crisis, has also warned about the risks tied to expanding AI investment. He argued that the industry's investment and profit structure is too heavily concentrated in a small number of major companies such as OpenAI and Anthropic, meaning problems at those firms could ripple through the wider sector.
Eisman said AI-related debt financing this year has reached about $500 billion. He also pointed to off-balance-sheet financing used by some companies as another risk factor.
Still, some say it is too early to interpret Firmus’s IPO withdrawal as a crisis for the AI industry as a whole. Josh Gilbert, chief market analyst for eToro Asia Pacific, said OpenAI and Anthropic already have actual users and revenue bases, making their situations different from Firmus. In his view, the episode signals that investors are no longer willing to accept elevated valuations simply because a company carries the “AI company” label.
