Nvidia Plans to Provide Credit Guarantee for Nscale's Over $5 Billion Data Center Construction Financing

Nvidia is in talks with emerging AI cloud service provider Nscale to provide a multi-billion-dollar credit guarantee for the latter's debt financing to build a 460-megawatt data center in West Virginia, USA. The data center will exclusively serve AI company Anthropic, and the two parties have already signed a $45 billion lease contract.

According to the latest report by The Information, the guarantee amount is expected to exceed $5 billion. If the deal goes through, it will further strengthen the chip supply ties between Nvidia and Anthropic—Anthropic is one of the world's largest users of AI server chips, but it has consistently pursued a diversified chip procurement strategy and does not rely entirely on Nvidia.

The agreement has not yet been signed, and the terms may still change.

Guarantee structure: residual value guarantee, not chips or leases

According to people familiar with the matter who spoke to the media, the guarantee will be structured as a "residual value guarantee," covering the data center facility itself rather than the lease or the chips.

This structure will enable Nscale to finance the project construction with an investment-grade rating. If Nscale fails to make construction payments on time, Nvidia will step in to pay on its behalf, take over the facility during a transition period, and assist in arranging resale and subleasing.

People familiar with the matter said this differs from Nvidia's previous, larger-scale credit support agreements—those typically covered customers' data center leases or chip financing, whereas this one directly targets power and construction costs.

Behind the $45 billion contract: Nscale and Anthropic's West Virginia project

Nscale disclosed in its IPO prospectus last month that it had signed a $45 billion contract with Anthropic to lease the first 460-megawatt building at its Monarch data center campus in West Virginia. The facility will be equipped with Nvidia's latest-generation Vera Rubin GPUs.

According to industry estimates, the shell cost of building a data center with 1 gigawatt of power capacity is about $12 billion; based on this, the scale of Nvidia's credit support for Nscale's project is very likely to exceed $5 billion. Previous reports said related construction costs have continued to climb.

In addition, according to reports, Anthropic also plans to lease the second phase of the West Virginia campus, with a contract roughly comparable in scale to the first phase.

Nvidia's strategic logic: bind Anthropic, defend the emerging cloud ecosystem

An industry investor analyzed that the core motivation for Nvidia's move is to ensure Nscale's success and thereby maintain its deep ties with Anthropic.

Unlike most of its peers, Anthropic has a more diversified chip procurement strategy and does not mainly rely on Nvidia. If Nvidia can use its credit backing to help the Nscale project materialize, it is in effect securing a large-scale application scenario for its own Vera Rubin chips.

From a broader perspective, Nvidia's largest traditional customers—Google, Microsoft, and Amazon—are accelerating the development of their own server chips to reduce their dependence on Nvidia. This makes emerging cloud providers (neoclouds) such as Nscale, CoreWeave, and Firmus increasingly strategically valuable to Nvidia. This summer, Nvidia even adjusted its revenue disclosure method to specifically highlight the contribution of emerging cloud providers—a group that has become a key focus of Nvidia's support since the GPU demand surge began in 2023.

$170 billion ecosystem bet: the full picture of Nvidia's emerging cloud strategy

To date, Nvidia has provided about $170 billion in credit support and investment to emerging cloud providers and other large customers.

In addition to Nscale, Nvidia is also in talks to invest hundreds of millions of dollars in Australian AI cloud service provider Firmus. Firmus abruptly withdrew its IPO application earlier this month, and according to a report by The Information last week, Nvidia's potential investment was one of the backgrounds to the negotiations.

To support this ecosystem, Nvidia has set up a dedicated internal team, co-led by Jensen Huang's son-in-law Nico Caprez, to help emerging cloud providers find data center sites with available power—such resources are extremely scarce, and whether building independent power sources or connecting to the grid, both require a great deal of time.

However, emerging cloud providers generally face severe financial pressure: most of these companies have not yet been validated by the market and need to significantly grow revenue to repay the huge debts borrowed to purchase Nvidia servers, and persistently rising interest rates have further intensified this pressure. Some industry executives believe that consolidation in the sector is inevitable. Whether Nvidia continues to support this ecosystem will directly determine the survival of some emerging cloud providers. Risk disclosure and disclaimer

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