Nvidia is in talks to guarantee billions in debt financing for AI cloud provider Nscale’s planned Anthropic data center in West Virginia, The Information reported Thursday, a story Bloomberg later corroborated.
AI data center (Credits: Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
Nvidia’s Residual Value Guarantee for Nscale
In essence, the chipmaker would be co-signing a customer’s loans — a sign of how hard the AI industry is working to keep its buildout plans afloat as investors grow jittery about the sums involved. The arrangement would help Nscale secure financing for the electricity and construction costs of its West Virginia campus.
Under what’s known as a residual value guarantee, Nvidia would step in if Nscale defaulted on construction payments, temporarily take over the facility, and help find a buyer and new tenant. Nvidia’s earlier support for cloud providers has mostly covered leases and chip purchases — not construction.
$44.6 Billion Anthropic Contract at Stake
Anthropic has signed a $44.6 billion contract for the project’s first building alone, according to Nscale’s IPO filing — a 460-megawatt facility expected to use Nvidia’s next-generation Vera Rubin chips. The companies are also discussing a second deal worth roughly $45 billion for another building.
The stakes are high for Nscale, which is seeking to go public at a valuation of up to $35 billion despite concerns about its ability to deliver. The company had only about 25,000 advanced AI chips running in August — a fraction of the nearly 500,000 it plans to deploy — and its West Virginia campus has faced flooding problems and delays, though it won state certification in September.
Why It Matters: The Neocloud Squeeze
Nvidia has extended roughly $170 billion in investments and credit support to neoclouds and large customers, per The Information — including $1 billion in convertible financing committed to Nscale in September. Neoclouds, which rent out AI computing power without a cash-rich core business, have been hammered by investors: shares of CoreWeave, Nebius, and IREN each fell more than 30% in October, CNBC reported. One investor told The Information that Anthropic’s involvement likely explains Nvidia’s interest in keeping Nscale’s project on track.
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Source: TechCrunch AI — read the full story there.