The proprietors of Switch are considering an initial public offering (IPO) for the data center operator, which could potentially value the company at approximately $40 billion, inclusive of debt, as reported by sources familiar with the situation.

According to these sources, discussions regarding the IPO are still in the preliminary phase, emphasizing that the plans are contingent on market conditions and that no definitive decisions have been made.

In recent weeks, the investment firms that own Switch have engaged in initial conversations with investment bankers about a possible stock market launch, which could occur as soon as 2025, as per the sources who requested anonymity due to the confidential nature of the discussions.

This initiative comes at a time of heightened investor interest in generative artificial intelligence. The surge in AI has significantly boosted demand for infrastructure, including data centers and high-performance servers, benefiting companies like Nvidia and other major tech players.

Switch, based in Las Vegas, was taken private by DigitalBridge and IFM Investors for $11 billion in 2022. In 2023, Australian pension fund Aware Super acquired a minority stake from the owners of Switch.

DigitalBridge, IFM, and Aware Super have chosen not to comment, and Switch has not yet responded to requests for comment.

The data center and server sector has seen increased deal activity in recent months, driven by the rapid growth of AI.

Earlier in September, Blackstone finalized a deal to acquire the Australian data center company AirTrunk for over A$24 billion ($16 billion). In August, AMD announced its acquisition of server manufacturer ZT Systems for $4.9 billion, as part of its strategy to enhance its AI chip and hardware offerings in competition with Nvidia.

Founded in 2000 by tech entrepreneur Rob Roy, Switch serves prominent clients such as Nvidia, Dell Technologies, and FedEx.

As of January 2016, Switch has been utilizing renewable energy to power its data centers, as stated on its website. This commitment enhances its appeal to technology firms that are focused on meeting environmental goals and are eager to increase investments in decarbonization while still supporting the growth of energy-intensive data centers.

A recent report from Morgan Stanley indicates that the worldwide surge in data centers is projected to generate approximately 2.5 billion metric tons of carbon dioxide-equivalent emissions by the end of the decade.