NVIDIA is reportedly in discussions with emerging AI cloud provider Nscale to provide several billion dollars in debt credit support for the development of a 460-megawatt data center, which AI company Anthropic plans to lease, according to people familiar with the matter.
The deal has not yet been finalized and terms could still change, the sources said. Nevertheless, it underscores NVIDIA's ongoing financial backing of so-called "neoclouds" such as Nscale, CoreWeave and Firmus.
These companies carry substantial debt from financing AI-dedicated data centers and still need to raise more capital, putting them under pressure from investors. NVIDIA has already extended roughly $170 billion in credit support and investments to these neoclouds and other large customers.
Last week, reports emerged that NVIDIA was also in talks to invest several hundred million dollars in Australian AI cloud provider Firmus, which abruptly halted its IPO plans earlier this month.
NVIDIA's credit support for the Nscale facility in West Virginia is primarily intended for the site's power supply and construction. This differs from the large-scale credit support NVIDIA typically provides to other customers, which usually covers data center lease payments or chip procurement financing.
In its IPO prospectus filed last month, Nscale disclosed that it signed a $45 billion contract with Anthropic to lease the first 460-megawatt facility at its Monarch data center campus in West Virginia. The facility will be equipped with NVIDIA's latest Vera Rubin GPUs.
Based on industry estimates that building a 1-gigawatt data center shell costs approximately $12 billion, NVIDIA's credit support could exceed $5 billion.
According to one person familiar with the matter, the agreement will be structured as a "residual value guarantee" on the data center itself, rather than on the lease contract or chips. This would allow Nscale to secure investment-grade financing for the project.
The person said that if Nscale defaults on construction payments, NVIDIA would step in to pay on its behalf and temporarily take over the facility, while also helping arrange a sale and re-lease of the site.
Another person familiar with the matter said Anthropic also plans to lease a second phase of the West Virginia campus under a contract of roughly similar size.
One investor in the sector speculated that NVIDIA wants to ensure Nscale's success because of the startup's relationship with Anthropic, which is one of the largest users of AI server chips.
Unlike most of its peers, Anthropic has adopted a diversified strategy of using chips from multiple suppliers rather than relying primarily on NVIDIA. Many neoclouds, including Nscale, remain unproven, and they need explosive revenue growth to repay the debt incurred from purchasing large volumes of servers, mostly NVIDIA's. This problem has become more acute as interest rates rise.
For NVIDIA, these neoclouds are critical because several of its major customers, including Google, Microsoft and Amazon, are developing their own server chips to reduce reliance on NVIDIA. This summer, NVIDIA even adjusted its revenue reporting to further highlight the prominence of neoclouds.
NVIDIA began aggressively supporting these companies starting in 2023, when demand for GPUs surged. Whether NVIDIA continues to support this ecosystem could determine the survival of some neocloud players and may trigger industry consolidation, which some executives view as inevitable.
NVIDIA appears eager to prove skeptics wrong and has provided multifaceted support to neoclouds, including equity investments, chip allocations, credit support and customer referrals. According to executives at NVIDIA and these cloud providers, an internal team at NVIDIA, co-led by Jensen Huang's son-in-law Nico Caprez, has even begun helping these cloud providers find sites with power supply availability. Such sites are extremely difficult to find, as securing either an independent power source or a connection to the public grid often takes a long time.
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