Nvidia weighs debt guarantee for Nscale’s West Virginia AI data center

WASHINGTON, Oct 31 (OPA) — Nvidia is negotiating a deal to act as a guarantor for billions in debt financing for AI cloud provider Nscale. The proposed arrangement centers on a 460-megawatt data center in West Virginia, which is slated to house Anthropic’s infrastructure. Under the terms of a residual value guarantee, Nvidia would step in to manage the facility and secure new tenants if Nscale defaults on construction payments.

Financial stakes for the project are substantial. Anthropic has already signed a $44.6 billion contract for the first building, with discussions underway for a second facility valued at approximately $45 billion. Nvidia has already committed $1 billion in convertible financing to Nscale as of September, part of a broader $170 billion investment strategy supporting various cloud providers and large-scale customers.

Nscale faces significant operational hurdles, including construction delays and environmental issues at the West Virginia site. The company, which is pursuing an IPO with a valuation of up to $35 billion, currently operates only 25,000 advanced AI chips, far below its target of 500,000. These challenges are compounded by broader market skepticism toward 'neocloud' providers, several of which saw share prices drop by more than 30% in October.

Anthropic’s own financial position remains under scrutiny as it prepares for a public offering. Blackstone analysts have warned that the company could receive a below-investment-grade credit rating, which would increase borrowing costs. By backing Nscale, Nvidia is effectively securing a critical deployment path for its next-generation Vera Rubin chips while ensuring that one of its largest customers maintains the necessary computing capacity to scale.