AI infra firm Accelevation's shares fall in tepid Nasdaq debut

Sept 30 : Data center infrastructure firm Accelevation fell 2.5 per cent in its Nasdaq debut on Wednesday, after pricing its IPO below its marketed range, signaling that investors are turning cautious on the AI story as spending uncertainty looms.

Accelevation provides power distribution, cooling, structural systems and installation services for data centers, which investors consider a key beneficiary of large-scale AI spending.

The tepid debut underscores growing focus on valuations in the picks-and-shovels story, with companies facing closer scrutiny over customer concentration, capital requirements and the visibility of future demand.

Surging bond yields and higher interest rates are also casting doubt on whether capital spending from tech firms that have committed hundreds of billions of dollars to the AI ecosystem, can be sustained.

"With fresh concerns over hyperscaler spending, investors are far more selective. Every deal is getting scrutinized," said Matthew Kennedy, senior strategist at Renaissance Capital, a provider of IPO-focused research and ETFs. "Fast growth is not getting these companies the same valuation premium it once did."

The AI infrastructure sector has faced recent setbacks, including the reported postponement of SB Energy's expected IPO and news of a dispute around Oracle and Blue Owl that could delay a data center project in New Mexico.

Accelevation had a $1.1 billion backlog as of June 30, but warned investors in its prospectus that cancellations, project delays and customer deferrals could weigh on the figure and prevent conversion into revenue.

CEO Michael Rubiera, however, told Reuters in an interview that the company had not seen signs of a slowdown. "We're seeing continued momentum across all of our product lines, across all parts of our company to this day."

Accelevation's shares opened for trading at $17.55 on Wednesday, after the company priced its IPO at $18 per share, below its marketed range of $20 to $24, valuing the firm at $3.94 billion. 

The lukewarm reception is in contrast to AI-focused IPOs earlier this year, when investors were vying for exposure to companies powering the boom. Competitor Forgent Power, which went public in February, is up about 38 per cent from its IPO price.

"There's no question Accelevation would have seen a warmer reception had it gone public during the summer," Kennedy added.

The US IPO market has also entered the fall on shaky footing, with heightened uncertainty pushing some IPO hopefuls to delay their plans.