Firmus's $44bn valuation crumbles weeks before ASX debut

Firmus Technologies was supposed to be Australia's biggest initial public offering since Telstra went public nearly three decades ago. The AI datacentre company had lined up a late-October listing on the ASX, priced at $11 per share, and was backed by some of the world's most powerful investors: Nvidia, Blackstone, Jane Street, and Coatue. Then, just weeks before the scheduled debut, the entire structure began to crack.

Multiple sources told Guardian Australia that Firmus is now frantically cutting its valuation to find a price investors will actually accept—or may abandon the offering entirely. The company withdrew from a scheduled parliamentary inquiry into artificial intelligence on Thursday amid what insiders described as harried negotiations to salvage the float. The momentum that had carried Firmus to a near-$44 billion valuation had evaporated almost as quickly as it had built up.

The scale of the reversal is staggering. Just over a year ago, when Nvidia and other early backers took equity stakes, Firmus was valued at $1.85 billion. Eight weeks before the planned listing, that figure had climbed to $15 billion. Days before the withdrawal, it had nearly tripled again to almost $44 billion. Now that valuation is being "heavily unwound," in the language of those tracking the situation. One investment manager briefed on the float captured the sentiment plainly: "The whole thing was getting fanciful. It's a business that's losing hundreds of millions of dollars, and yet its valuation kept going up nonstop every couple of months."

The core problem is not whether artificial intelligence will continue to drive massive spending—it almost certainly will. The problem is whether Firmus, a company still in its startup phase, is worth anywhere near what investors were being asked to pay. Firmus operates two small facilities and has seven contracted and four planned datacentres in the pipeline. But here is the catch: roughly 97 percent of its contracted revenue depends on sites that have not yet been built. Armina Rosenberg, co-founder of Minotaur Capital, laid out the dependency plainly: "You only get near the offer price if delivery, financing and renewals all go to plan." That is a lot of moving parts that need to align perfectly.

The company's appeal is straightforward enough. It is building and operating liquid-cooled "AI factories" packed with Nvidia graphics processing units—the chips that power modern artificial intelligence systems. Meta, OpenAI, and Nvidia have all signed contracts to use Firmus's facilities. But Firmus has chosen to focus its expansion in Asia rather than Australia or the United States, where local communities are increasingly pushing back against new datacentre developments. That geographic choice comes with its own obstacles: power constraints, long construction timelines, and the inherent risks of building in unfamiliar regulatory environments.

There is also a deeper vulnerability. The current stratospheric spending on AI infrastructure by the so-called hyperscalers—Microsoft, Google, Meta—cannot continue at this pace indefinitely. When that spending eventually moderates, third-party datacentres like Firmus could be among the first to feel the impact. Morningstar analyst Lochlan Halloway drew on economist Charles P. Kindleberger's framework for understanding market bubbles—displacement, boom, euphoria, distress, and revulsion—and concluded that sentiment around Firmus had entered the euphoric phase. That does not mean the company is worthless or that its underlying business is hollow, Halloway cautioned. Rather, the risk is that investors were being asked to pay an unsustainable price for an asset whose value depends on a chain of assumptions that may not hold.

As of now, Firmus faces a binary choice. The company can radically reduce the share price—and with it, the overall valuation—and proceed with the listing. Or it can withdraw the offering altogether and return to private fundraising. Either path represents a dramatic reversal from the confidence that surrounded the deal just weeks earlier. The October 23 listing date that was supposed to mark a milestone for Australian capital markets is now in serious doubt.