The Firmus website says its mission is to build the most energy-efficient AI infrastructure.
“Our AI Factory platform, from cooling systems to grid orchestration software, was built to stay ahead of AI’s infrastructure and energy realities,” it says.
Salt Funds managing director Matt Goodson said rising bond yields had put the AI/data centre sector under pressure.
“If you look at the broader sector over the last few weeks, the quality listed players like Goodman Group, Infratil and Next DC have all been quite weak, chiefly under pressure from rising bond yields,” Goodson said.
“Effectively these are very long duration property assets in many ways with very attractive yields on development, so rising bond yields has been the thing weighing on the sector.”
Firmus started in 2019 as a Bitcoin miner and has been through a few iterations since.
This week, Australian media reports said data centre firm CDC – half owned by Infratil – and Firmus had terminated their AI data centre rollout partnership, known as Project Southgate.
US chip giant Nvidia has a 7.2% stake in Firmus and is reportedly involved in its funding, as well as supplying it with chips – the kind of circularity that is not unusual in the sector globally.
“The very rapid expansion of the entire sector globally and the near vertical rises in annualised revenue that these companies have been expecting are just starting to slow down a little bit in the last several months, particularly as far cheaper open-source models are adopted by many corporates,” Goodson said.
“As always, in a brand new and rapidly growing sector there’s a mountain of questions, and I think this likely Firmus repricing is sort of a symptom of that.”
Gaurav Gupta, vice-president analyst and chief of research for the emerging market dynamics research team at technology research firm Gartner, said the sceptical market reaction to Firmus was not out of the ordinary.
Gupta said in a report that recent IPO filings from British-based neocloud Nscale met with similar polarised sentiment.
Gartner predicts cost pressure and a lack of a differentiating business model will force more than 80% of neocloud providers to cease independent operations by 2030.
“The neoclouds will be the most exposed to the imbalance between revenue and capital spending the overall AI market is experiencing.
“The hyperscalers and other more diversified providers will be less exposed due to their access to other markets and significant cashflow from existing operations.”
There was also a bull case, as Gartner’s recent semiconductor revenue projection showed a new growth baseline and supply remained heavily constrained.
The new baseline for non-memory chip growth shows a revenue compound annual growth of 22%, while the baseline for over three decades has been less than 6%.
“So, the question isn’t about the future of AI or demand for compute-to-run AI workloads, but about business models and what survives,” Gartner said.
Election approaches
For the moment, the local market is focused more on rising bond yields than the November 7 general election.
US 10-year bonds, which set the scene for borrowing costs worldwide, traded at a four-year high of 5.36%.
UBS said the New Zealand election was shaping up to be a finely balanced affair.
Polling remains close before the November ballot, with neither the right nor left bloc clearly positioned to form a government, UBS said.
Combined support for the major parties has fallen to an all-time low of below 60%, highlighting growing fragmentation of the voter base and the increasing influence of minor parties.
If current polling holds, the Opportunity Party was likely to cross the 5% threshold, leaving both blocs reliant on its support for a majority, and adding uncertainty around coalition formation and policy outcomes, UBS said.
“Historically, NZX50 impacts have been limited ahead of elections, with greater sensitivity emerging in the three months following a change in government as investors digest new policy,” UBS said.
Despite the close polling, the economic backdrop leans towards a change in Government, it said.
Lodestone approaches
Meanwhile, the IPO of New Zealand’s Lodestone Energy is set to close on Tuesday for retail investors and on Wednesday for institutional investors.
The company recently signed electricity supply agreements with Briscoe Group and Farro Fresh, adding another group of New Zealand brands to its growing commercial customer base.
Managing director Gary Holden said the new agreements reflect demand for renewable electricity and greater certainty over energy costs, while reinforcing the confidence leading New Zealand businesses have in Lodestone’s solar model.
“These are familiar New Zealand brands with different electricity needs, but a shared interest in renewable power and more predictable energy costs,” Holden said.
Lodestone already owns and operates five utility-scale solar farms, producing enough electricity to power more than 33,000 average New Zealand homes annually.
Its sixth farm is under construction and the company is targeting 16 to 18 operating solar farms by 2032.
Tower upgraded
Forsyth Barr has upgraded its recommendation on Tower to “outperform” from “neutral” after this week’s update from the insurer.
The broker said the upgrade reflected greater confidence in partnership-led growth and leverage to a pricing recovery.
Tower upgraded 2026 underlying net profit guidance to $69 million to $79m, up 23% at the midpoint versus previous guidance, reflecting $20m of large-event allowance underutilisation.
The 2026 year’s gross written premium growth of 3% also exceeded Forsyth Barr’s estimates, suggesting stronger-than-expected second-half momentum from organic and partnership-led customer growth.
“Given our expectations for risk-mix impacts to moderate through first half 2027 and previous analysis suggesting the NZ insurance pricing cycle could be approaching trough levels, our confidence in Tower’s growth outlook has improved.”
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