Nvidia Weighs Guaranteeing Debt for Nscale's West Virginia AI Data Center

Nvidia is in talks to guarantee billions of dollars in debt financing for AI cloud provider Nscale's planned Anthropic data center in West Virginia, The Information reported Thursday, with Bloomberg later corroborating the report. The proposed arrangement would help Nscale secure financing for electricity and construction costs at its campus, while Anthropic has signed a $44.6 billion contract for the project's first building alone, according to Nscale's IPO filing.

How the guarantee would work

Under what is 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. The chipmaker would in essence be cosigning a customer's loans, a sign of how hard the AI industry is working to keep buildout plans afloat as investors grow jittery about the amounts of money involved.

Nscale's project and financing pressures

The stakes are high for Nscale, which is seeking to go public at a valuation of up to $35 billion despite growing concerns about its ability to deliver on ambitious data center projects. Anthropic's contract covers the first 460 megawatt building at the campus, which is expected to use Nvidia's next generation Vera Rubin chips, and the companies are also discussing a second deal worth roughly $45 billion for another building. Nscale has struggled to get projects off the ground: it had about 25,000 advanced AI chips running in August, a fraction of the nearly 500,000 it plans to deploy. Its West Virginia campus has also faced trouble, with runoff from the construction site flooding nearby homes more than once, though 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.

Nvidia's broader role and Anthropic's expansion

Nvidia has been 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, and shares of CoreWeave, Nebius, and IREN had each fallen more than 30 percent in October as of last week, CNBC reported. The proposed guarantee would deepen Nvidia's financial ties to Nscale while helping secure a major customer for its chips. Anthropic, one of the largest buyers of AI computing power, has spread its infrastructure spending across multiple chipmakers, and one investor told The Information that Anthropic's involvement likely explains Nvidia's interest in keeping Nscale's project on track. The discussions also come as Anthropic faces questions about how it will finance its own rapid expansion: the company filed to go public this week, but Blackstone has warned investors that Anthropic may receive a below investment grade credit rating after its IPO, which would raise its borrowing costs and could push it to keep relying on stronger partners to back its debt.

Sources: TechCrunch