Australia's Firmus Pulls IPO as Fears Spread Over AI Overvaluation

As concerns mount over stretched valuations in artificial intelligence infrastructure, Australian data-center operator Firmus has shelved its initial public offering plans. Investor wariness is also spreading as growth expectations for AI-related companies race ahead of actual revenue and profitability.

According to industry officials on October 19, Firmus this month halted its planned listing on the Australian Securities Exchange. The company had been seeking a valuation of about A$44 billion, but investor demand reportedly fell short.

Firmus runs AI data-center businesses in Australia and Asia and is known to have received investment from Nvidia. But the company has only two data centers currently in operation, and revenue for fiscal 2025-2026 is projected at about $50.8 million, prompting criticism that the valuation was excessive.

Concerns about profitability across AI infrastructure companies are also intensifying. US AI cloud company CoreWeave saw its stock tumble 15% in a single day last week. As of late June, its total debt stood at $35.6 billion, while the market yield on bonds issued in June climbed from about 9.675% at the time to roughly 15% recently.

Markets are increasingly focused on whether the massive sums being poured into AI will ultimately translate into real cash flow and earnings. Higher funding costs are also adding to doubts about the economics of data centers and AI infrastructure businesses.

Valuations for major AI companies such as Anthropic and OpenAI have also become a flashpoint. Anthropic is reportedly seeking a valuation of about $2 trillion as it pursues a US stock-market listing, even though its operating loss exceeded $8 billion last year. OpenAI, which is also preparing for an IPO next year, has been discussed at a valuation of about $1.4 trillion.

Steve Eisman, the investor known as one of the real-life figures behind "The Big Short" after betting against the US housing market during the 2008 financial crisis, has also warned about the risks of expanding AI investment. He said the industry's investment and profit structure is too heavily concentrated in a handful of large companies such as OpenAI and Anthropic, and that trouble at those firms could send shockwaves across the broader sector.

Eisman said AI-related debt financing will amount to about $500 billion this year. He also flagged off-balance-sheet financing used by some companies, where liabilities do not appear directly on financial statements, as another risk factor.

Still, some market participants say it is too early to read Firmus's IPO withdrawal as a crisis for the entire AI industry. Josh Gilbert, chief market analyst for eToro Asia Pacific, said OpenAI and Anthropic already have real users and revenue bases, setting them apart from Firmus. He described the episode as a sign that investors are no longer willing to accept lofty valuations simply because a company is labeled an AI business.