Nvidia in talks to back Nscale's Anthropic data center debt
Nvidia is reportedly discussing a residual value guarantee for billions in construction debt tied to Nscale's planned Anthropic data center in West Virginia.
The story in focus
TechCrunch reports Nvidia is in talks to provide a residual value guarantee backing billions in debt financing for Nscale's planned Anthropic data center in West Virginia, citing The Information and Bloomberg. Anthropic has signed a $44.6 billion contract for the first building, per Nscale's IPO filing.
- The Information reported Thursday that Nvidia is in talks on a guarantee; Bloomberg later corroborated it
- Under the arrangement, Nvidia would step in if Nscale defaulted on construction payments, temporarily take over the facility and help find a buyer and tenant
- Anthropic's $44.6 billion contract covers the first 460-megawatt building, per Nscale's IPO filing
- Nscale had about 25,000 advanced AI chips running in August against plans for nearly 500,000
- Nvidia committed $1 billion in convertible financing to Nscale in September
What the guarantee would cover
TechCrunch, citing The Information and a Bloomberg corroboration, reports that Nvidia is discussing a residual value guarantee for billions in debt financing behind Nscale's planned Anthropic data center in West Virginia. Under the structure described, the chipmaker would step in if Nscale defaulted on construction payments, temporarily take over the facility and help find a buyer and new tenant. The financing would support electricity and construction costs at the campus.
The arrangement differs from Nvidia's earlier support for cloud providers, which the report says has mostly covered leases and chip purchases rather than construction.
Contract scale and execution risk
According to Nscale's IPO filing, Anthropic has signed a $44.6 billion contract for the first 460-megawatt building, which is expected to use Nvidia's Vera Rubin chips. The companies are also discussing a second deal worth roughly $45 billion for another building, per the report.
Nscale is seeking to go public at a valuation of up to $35 billion. It reported about 25,000 advanced AI chips running in August, a fraction of the nearly 500,000 it plans to deploy, and this month Microsoft pulled out of a planned Nscale site in England after grid power there was pushed into the 2030s.
Nvidia's exposure
Nvidia committed $1 billion in convertible financing to Nscale in September. TechCrunch cites The Information as putting Nvidia's total investments and credit support to neoclouds and large customers at roughly $170 billion. Investor concerns about neocloud economics have weighed on peers including CoreWeave, Nebius and IREN, whose shares each fell more than 30% in October as of last week, according to CNBC.
What would Nvidia do under the proposed residual value guarantee?
It would step in if Nscale defaulted on construction payments, temporarily take over the facility and help find a buyer and new tenant, according to The Information as cited by TechCrunch.
Sources & further reading
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