Nvidia weighs playing the cosigner for Nscale’s AI data center in West Virginia

Nvidia is reportedly in talks to guarantee billions in debt for Nscale's planned Anthropic data center campus in West Virginia, according to The Information, with Bloomberg later corroborating. Under the proposed residual value guarantee, Nvidia would step in if Nscale defaulted on construction payments, temporarily take over the facility, and help find a buyer and new tenant.

That's new territory. Nvidia's earlier support for cloud providers mostly covered leases and chip purchases, not bricks and power. The stakes are large: Nscale's IPO filing shows Anthropic signed a $44.6 billion contract for just the first 460-megawatt building, which is expected to run Nvidia's next-generation Vera Rubin chips.

We read this as a sign of strain, not strength. A healthy project with a creditworthy tenant and a contract that size shouldn't need its chip vendor to co-sign the construction loan. That Nvidia is considering it suggests lenders want more comfort than Nscale alone can provide, and that Nvidia wants this campus built badly enough to put its own balance sheet behind it.

It's easy to see why. Anthropic is one of the largest buyers of compute and has spread its spending across multiple chipmakers. One investor told The Information that Anthropic's involvement likely explains Nvidia's interest. Keeping a marquee customer on Nvidia silicon is worth a lot. But the chain of dependence here is getting long: Nvidia backs Nscale, Nscale builds for Anthropic, and Anthropic, per Blackstone's warning to investors, may land a below-investment-grade rating after its IPO. Each link leans on the next.

The circularity is what we're watching most closely. The Information tallies roughly $170 billion in investments and credit support from Nvidia to neoclouds and large customers, including $1 billion in convertible financing committed to Nscale in September. When a supplier finances the demand for its own product, revenue can look sturdier than the underlying economics. That works beautifully while growth holds. If it slips, the losses don't stay in one place.

And Nscale's execution record gives us pause. It had about 25,000 advanced AI chips running in August against plans for nearly 500,000. Microsoft just pulled out of a planned Nscale site in England after grid power was pushed into the 2030s. Meanwhile, construction runoff from the West Virginia site has flooded nearby homes more than once. Those neighbors are the people the financial engineering doesn't account for, and their experience is a preview of what an accelerated buildout costs on the ground.

We want the compute to exist. Useful AI needs it. But a buildout that increasingly depends on suppliers guaranteeing their customers' debts is one where the risk is being moved around rather than reduced.

Neoclouds rent out AI computing power without a cash-rich core business behind them, which makes them more exposed to financing conditions. Shares of CoreWeave, Nebius, and IREN had each fallen more than 30% in October as of last week, CNBC reported. Nscale is seeking to go public at a valuation of up to $35 billion, and the companies are discussing a second roughly $45 billion deal for another West Virginia building. The project won state certification in September after months of negotiations.