Nvidia weighs playing the cosigner for Nscale’s AI data center in West Virginia
When investors get nervous about AI spending, it helps to have the chipmaker that sells the chips offer to cosign the loan.
Key points
- Nvidia is in talks to guarantee billions in debt for Nscale's Anthropic data center in West Virginia.
- Anthropic signed a $44.6 billion contract for the first 460-megawatt building at the campus.
- Nscale is seeking to go public at a valuation of up to $35 billion.
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. Under the arrangement, the chipmaker would effectively co-sign a customer's loans.
Anthropic has signed a $44.6 billion contract covering the first 460-megawatt building at the campus, which is expected to use Nvidia's next-generation Vera Rubin chips, according to Nscale's IPO filing. The companies are also discussing a second deal worth roughly $45 billion for another building.
How the guarantee would work
The proposed residual value guarantee would help Nscale secure financing for electricity and construction costs at the West Virginia campus. If Nscale defaulted on construction payments, Nvidia would step in, 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 mostly covered leases and chip purchases, not construction. The company committed $1 billion in convertible financing to Nscale in September and has extended roughly $170 billion in investments and credit support to neoclouds and large customers, The Information reported.
Anthropic's involvement likely explains Nvidia's interest in keeping Nscale's project on track.
— one investor, to The Information
Pressure on Nscale and Anthropic
Nscale is seeking to go public at a valuation of up to $35 billion despite concerns about its ability to deliver on ambitious data center projects. It had about 25,000 advanced AI chips running in August, a fraction of the nearly 500,000 it plans to deploy, and its West Virginia site has flooded nearby homes with construction runoff more than once.
Anthropic filed to go public this week, and Blackstone has warned investors that the company may receive a below-investment-grade credit rating after its IPO. One investor told The Information that Anthropic's involvement likely explains Nvidia's interest in keeping Nscale's project on track.
