Nvidia weighs guaranteeing billions in debt for Nscale's AI data center in West Virginia
Chipmaker Nvidia is in talks to back debt financing for cloud provider Nscale, which is planning a data center for Anthropic in West Virginia. Nscale is also preparing to go public.
US chipmaker Nvidia is in talks to guarantee billions of dollars in debt financing for AI cloud provider Nscale, which plans to build a data center in West Virginia for Anthropic. The Information reported the talks on Thursday, and Bloomberg later corroborated it. In effect, Nvidia would be co-signing a customer's loans, a sign of how hard the AI industry is working to keep its buildout plans afloat while investors grow uneasy about the sums involved.
How the guarantee would work
The proposed arrangement would help Nscale secure funding for the electricity and construction costs of the campus. According to The Information, it would be a residual value guarantee: if Nscale defaulted on construction payments, Nvidia would step in, temporarily take over the facility, and help find a buyer and a new tenant. Nvidia's earlier support for cloud providers has mostly covered leases and chip purchases rather than construction.
Anthropic's contract with Nscale covers the first 460-megawatt building at the West Virginia campus, which is expected to use Nvidia's next-generation Vera Rubin chips. Nscale's IPO filing puts the value of that building's contract alone at $44.6 billion. The companies are also discussing a second deal, worth roughly $45 billion, for another building.
Nscale's difficulties
Nscale is seeking to go public at a valuation of up to $35 billion, even as concerns grow about its ability to deliver on ambitious projects. In August it had about 25,000 advanced AI chips running, a fraction of the nearly 500,000 it plans to deploy. Runoff from the West Virginia construction site has flooded nearby homes more than once, and the project won state certification in September after months of negotiations. This month, Microsoft pulled out of a planned Nscale site in England after grid power for it was pushed into the 2030s.
Wider context
The Information says Nvidia has extended roughly $170 billion in investments and credit support to neoclouds and large customers, including $1 billion in convertible financing committed to Nscale in September. Neoclouds rent out AI computing power without a cash-rich core business behind them. CNBC reported that shares of CoreWeave, Nebius and IREN each fell more than 30% in October.
Anthropic filed to go public this week, but Blackstone has warned investors that it may receive a below-investment-grade credit rating after the IPO. Such a rating would raise its borrowing costs and could push it to keep relying on stronger partners to back its debt.
