According to a report by The Information on Thursday, NVIDIA is in talks to provide billions of dollars in debt financing guarantees for the Anthropic data center planned by Nscale, a cloud service provider. Bloomberg later confirmed this report. According to a IPO document from Nscale, Anthropic has signed a contract worth $4.46 billion for just the first building of this project.
Essentially, this chip manufacturer will co-sign on customers' loans, indicating that as investors become more cautious about the scale of related funds, the AI industry is striving to maintain its construction plans.
The proposed arrangement will help Nscale secure financing for the electricity and construction costs of its park in West Virginia. According to what is described as a residual value guarantee, if Nscale fails to make the construction payments due to breach of contract, NVIDIA will step in, temporarily take over the facility, and assist in finding a buyer and new tenants, according to The Information.
NVIDIA's previous support for cloud service providers mainly covered leasing and chip procurement, rather than the construction process itself.
For Nscale, this arrangement is of great significance. Despite growing concerns from the outside world about whether it can fulfill its ambitious data center projects, the company is still seeking to go public with a valuation of up to $35 billion.
The contracts between Anthropic and Nscale cover the first 460-megawatt building in the Nscale West Virginia campus, and it is expected to utilize NVIDIA's next-generation Vera Rubin chips. The two parties are also discussing another deal worth approximately $45 billion for another building.
Nscale has been facing difficulties in implementing the project. In August, approximately 25,000 advanced AI chips were in operation, which is just a small portion of the nearly 500,000 chips that were planned to be deployed. The company's campus in West Virginia has also encountered problems; runoff from the construction site has flooded nearby residential homes on several occasions. After months of negotiations, the project obtained state-level certification in September.
This month, as the power supply time for the grid was postponed to the 2030s, Microsoft withdrew from a site planned for Nscale in the UK.
According to The Information, NVIDIA has always been an important financial supporter of the industry, providing approximately $170 billion in investments and credit support to neoclouds and large customers, including a $1 billion convertible financing commitment made to Nscale in September.
neoclouds refers to companies that rent out AI computing power without the support of a core business with sufficient cash reserves, and such companies are under pressure from investors. CNBC reported last week that as of October, the stock prices of CoreWeave, Nebius, and IREN had all fallen by more than 30% that month.
The proposed guarantee will further deepen the financial ties between NVIDIA and Nscale, while also helping to secure an important customer for its chips. Anthropic is one of the largest buyers of AI's computing power and has spread its infrastructure spending across multiple chip manufacturers. An investor told The Information that Anthropic's involvement is likely to explain why NVIDIA is interested in seeing the project with Nscale move forward.
These discussions also occur at a time when there are doubts about how Anthropic itself will finance its rapid expansion. The company has submitted an application for listing this week, but Blackstone has warned investors that Anthropic may receive a credit rating below investment grade after IPO. If it is rated as junk grade, the borrowing costs of Anthropic will rise, and it may be forced to continue relying on stronger partners to support its debt.
