Nvidia Discusses Loan Guarantee for Nscale Campus

Nvidia is negotiating to secure billions of dollars in loans for the Nscale campus in West Virginia, which is set to host Anthropic's infrastructure. This operation, based on a residual value guarantee, comes as neo-clouds face investor skepticism and Anthropic prepares for its IPO amid uncertain credit conditions. Contracts related to the site are already reaching record amounts.

Market Pressure and Uncertainties Surrounding Anthropic

Neo-clouds, which offer AI computing power without a strong cash-generating core business, are under pressure from investors. In October, shares of CoreWeave, Nebius, and IREN each fell by more than 30%. Infrastructure challenges are also weighing on projects: this month, Microsoft withdrew from a planned Nscale site in England after the power supply was postponed to the 2030s. Anthropic, for its part, must address questions about funding its rapid growth. The company filed for an IPO this week. Blackstone warned that Anthropic's credit rating could fall below investment grade after the IPO. Such a rating would increase its borrowing costs and could lead it to rely more on partners with stronger balance sheets.

Giant Contracts and Turbulent Construction in West Virginia

Anthropic has signed a $44.6 billion contract for the first building of the Nscale campus in West Virginia, according to Nscale's IPO filing. This first building, designed for a capacity of 460 megawatts, is set to use Nvidia's next-generation Vera Rubin chips. A second agreement, currently under discussion, is for approximately $45 billion for another building. Despite these ambitions, Nscale is struggling to accelerate: in August, the company was operating about 25,000 advanced AI chips, far from the nearly 500,000 it plans to deploy. The campus construction has also caused incidents, with site runoff flooding nearby homes multiple times. After several months of negotiations, the project received state certification in September.

A Residual Value Guarantee Under Discussion with Nvidia

Nvidia is currently discussing the possibility of securing several billion dollars in loans for the Nscale campus. This arrangement would aim to cover costs related to electricity and construction while providing a residual value guarantee: if Nscale fails to meet its construction payments, Nvidia would temporarily take over the management of the facility and assist in finding a buyer as well as a new tenant. Until now, Nvidia's support for cloud players has primarily been limited to leasing contracts and chip sales, without including construction. Nvidia has already injected nearly $170 billion in investments and credit support into the ecosystem, including $1 billion in convertible financing allocated to Nscale in September. This type of guarantee would strengthen its financial commitments to Nscale and allow it to solidify its relationship with a key client, as Anthropic spreads its infrastructure investments among several chip suppliers. According to an investor, Anthropic's involvement is likely the reason for Nvidia's interest in continuing the project.