Freedom: the cancellation of Firmus’ IPO shows rising requirements for AI companies

Australian data center operator Firmus Grid canceled an initial public offering that could have become the second-largest in the country’s history. The company cited market conditions and volatility. Freedom analyst Vladimir Chernov believes the failed listing reflects growing investor caution toward artificial intelligence infrastructure.

Firmus builds and operates data centers, providing computing capacity for AI. The company is developing projects in Australia and Asia; its investors include Nvidia.

According to Chernov, interest in the sector will remain, but investors will more closely assess operating capacity, revenue and the timeline for projects to reach profitability.

Business valuation was ahead of capacity build-out

Firmus planned to raise up to $5.5 bn at a valuation of more than $30 bn. At the same time, revenue for fiscal year 2026 totaled $51 mln. Of the announced projects with total capacity of 912 MW, facilities totaling only 46 MW had been built.

Chernov notes that such a significant gap between valuation and current results requires investor confidence in future revenues. With expensive capital, they are less willing to fund projects that may begin generating profits only in a few years.

After canceling the offering, Firmus intends to seek funds in the private market and consider alternative financing options.

High rates intensify competition for investor money

Since the start of 2026, the Reserve Bank of Australia has raised the policy rate four times. After the regulator’s September decision, it reached 4.6% per annum.

Chernov estimates that tighter policy increases the cost of raising capital and makes bonds a more serious competitor to IPOs. Investors gain the option to choose instruments with interest income and lower risk than shares of young companies.

At the same time, high rates reduce the attractiveness of businesses whose value is largely determined by profits in the distant future. For capital-intensive AI projects, this is especially significant: building data centers requires large investments long before returns are realized.

Companies with operating businesses will retain an advantage

Chernov expects that AI companies with already operating capacity and growing revenue will be favored. Others may need to lower their valuation or raise private funding on less favorable terms.

The cancellation of one major offering does not mean demand for the entire sector has disappeared. However, it shows that investors are willing to finance AI development given a more convincing balance of price, current performance and risks.

Earlier, Freedom Broker warned about deteriorating conditions in the U.S. IPO market after the postponement of the Bamboo Insurance Services and Holtec Nuclear offerings. Chernov noted that record levels of stock indices alone do not guarantee strong demand for shares of new issuers.

In a separate piece, Freedom linked the suspension of Holtec’s IPO to investor caution toward capital-intensive energy projects, including those related to supplying electricity to AI infrastructure.

Not an individual investment recommendation.