Australian artificial intelligence infrastructure hopeful Firmus is rapidly approaching its initial public offering on the Australian sharemarket, aiming to raise up to $7 billion. This significant float, potentially the nation’s second-largest after Telstra, has profoundly divided the market. Firmus rents specialised processing chips to large technology companies, operating as a “neocloud” business. Amid ambitious valuations, major fund manager Plato Investment Management plans to short-sell Firmus once trading begins, highlighting growing scepticism over its financial prospects.
Plato Investment Management, overseeing nearly $6 billion, is unconvinced by Firmus’s mooted $50 billion-plus valuation. Portfolio manager David Allen indicated his fund would likely short-sell at prices suggested by brokers like Morgan Stanley, who estimated a valuation up to $US90 billion. Allen stated, “The mooted valuation prices in five years of flawless execution from a loss-making business with barely a track record. Firmus appears to have a huge amount riding on very few customers,” naming Meta, OpenAI, and Nvidia. A key concern is the rapid obsolescence of graphics processing units (GPUs); Nvidia launches new chips annually while Firmus’s GPUs depreciate over six years, potentially devaluing older hardware faster than investments pay back.
Other market commentators echo caution. Former stockbroker Marcus Padley estimated Firmus’s fair value at a conservative $32 billion to $45 billion, noting the IPO valuation appears three times higher than a $15.5 billion private valuation in August. Cadence Asset Management founder Karl Siegling will also ignore the IPO, citing immense valuation and capital expenditure for a loss-making entity. Firmus is set to open its bookbuild next Thursday, with its prospectus expected by October 12. Its anticipated inclusion in major indices like the S&P/ASX 200 will compel Australian equities fund managers to make an active decision.
