Nvidia in Talks to Back Nscale’s West Virginia Buildout
Nvidia is reportedly in talks to guarantee billions of dollars in debt financing for AI cloud provider Nscale’s planned Anthropic data center in West Virginia, according to a Thursday report from The Information, later corroborated by Bloomberg. The arrangement would, in effect, have the chipmaker co-sign a customer’s loans—a striking sign of how aggressively the AI industry is working to sustain its infrastructure buildout as investors grow increasingly uneasy about the scale of spending involved.
Anthropic has already signed a $44.6 billion contract covering the first building alone, according to Nscale’s IPO filing. The proposed credit support would help Nscale secure financing for electricity and construction costs at its West Virginia campus.
How a Residual Value Guarantee Would Work
Under the structure 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, according to The Information. Nvidia’s earlier support for cloud providers has largely covered leases and chip purchases—not construction.
The stakes are especially high for Nscale, which is seeking to go public at a valuation of up to $35 billion despite mounting concerns about its ability to deliver on ambitious data center projects. The company had roughly 25,000 advanced AI chips running in August—a fraction of the nearly 500,000 it plans to deploy.
Scope of the Anthropic Deal
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. The companies are also discussing a second deal worth roughly $45 billion for another building.
Execution Challenges Mount
Nscale has struggled to get its projects off the ground. Its West Virginia campus has faced its own troubles: runoff from the construction site has flooded nearby homes more than once. In September, after months of negotiations, the project won state certification. This month, Microsoft pulled out of a planned Nscale site in England after grid power for it was pushed into the 2030s.
Nvidia’s Expanding Financial Role
Nvidia has become a major financial backer of the sector, extending roughly $170 billion in investments and credit support to neoclouds and large customers, according to The Information. That includes $1 billion in convertible financing committed to Nscale in September.
Neoclouds—which rent out AI computing power without a cash-rich core business behind them—have come under pressure from investors. Shares of CoreWeave, Nebius, and IREN had each fallen more than 30% in October as of last week, CNBC reported.
The proposed guarantee underscores the growing financial entanglement between chip suppliers and the cloud providers building out AI capacity—and the lengths to which the industry is going to keep those projects financed.
via TechCrunch AI