Nvidia Weighs Backing Nscale's Debt for Anthropic Campus
Nvidia is in talks to guarantee billions of dollars in debt for AI cloud provider Nscale's planned data center in West Virginia, The Information reported on Thursday. Bloomberg later corroborated the report, according to TechCrunch.
The site is being built for Anthropic. Nscale's IPO filing shows Anthropic signed a $44.6 billion contract for the first building alone. The two companies are also discussing a second deal worth roughly $45 billion for another building.
How the guarantee would work
The financing would cover electricity and construction costs at the campus. Under a residual value guarantee, as The Information described it, Nvidia would step in if Nscale defaulted on construction payments. It would take over the facility for a time and help find a buyer and a new tenant.
Until now, Nvidia's support for cloud providers has mostly covered leases and chip purchases, not construction. The first 460-megawatt building is expected to run on Nvidia's next-generation Vera Rubin chips. The Information put Nvidia's investments and credit support to neoclouds and large customers at about $170 billion. That includes $1 billion in convertible financing committed to Nscale in September.
Nscale's situation
Nscale wants to go public at a valuation of up to $35 billion. Concerns about its ability to deliver are growing. It had about 25,000 advanced AI chips running in August, against a plan for nearly 500,000. Runoff from the West Virginia construction site has flooded nearby homes more than once, and the project won state certification only in September. This month Microsoft pulled out of a planned Nscale site in England after grid power for it slipped into the 2030s.
Investors have grown wary of neoclouds, which rent out AI computing power without a cash-rich core business behind them. CNBC reported that CoreWeave, Nebius and IREN had each lost more than 30% of their share price in October as of last week.
One investor told The Information that Anthropic's involvement likely explains Nvidia's interest. Anthropic, one of the largest buyers of AI computing power, spreads its infrastructure spending across several chipmakers. It also filed to go public this week. Blackstone has warned investors that Anthropic may get a below-investment-grade credit rating after the IPO.
Source: TechCrunch