Nvidia Weighs Billions in Nscale Debt Guarantees for Anthropic AI Campus
Nvidia may guarantee billions in Nscale debt for Anthropic's $44.6 billion West Virginia AI campus as financing, grid and execution risks now intensify.
Summary
Nvidia is discussing a residual value guarantee for billions of dollars of Nscale debt funding electricity and construction at its West Virginia AI campus. If Nscale defaults on construction payments, Nvidia would temporarily take over the facility and help find a buyer and tenant, extending its support beyond its usual lease and chip-purchase backing. Anthropic has signed a $44.6 billion contract for the first 460-megawatt building, expected to use Nvidia’s next-generation Vera Rubin chips; the companies are discussing roughly $45 billion for a second building. The structure would keep a major Nvidia chip customer’s project moving as investors question AI infrastructure spending.
Nscale is pursuing an IPO at up to a $35 billion valuation, but had only about 25,000 advanced AI chips operating in August against plans for nearly 500,000. West Virginia construction runoff has repeatedly flooded nearby homes, although the project secured state certification in September after months of negotiations. In October, Microsoft abandoned a planned Nscale site in England after grid power slipped into the 2030s. Nvidia has provided roughly $170 billion in investments and credit support to neoclouds and large customers, including $1 billion in convertible financing committed to Nscale in September. CoreWeave, Nebius and IREN had each fallen more than 30% in October as of last week. Anthropic, one of the largest AI compute buyers, spreads spending across chipmakers and filed for an IPO this week; Blackstone warned it could receive a below-investment-grade rating, raising borrowing costs and dependence on stronger partners.
Positives
- Anthropic’s $44.6 billion contract anchors Nscale’s first 460-megawatt West Virginia building, which is expected to use Nvidia Vera Rubin chips.
- A roughly $45 billion second-building agreement is under discussion between Anthropic and Nscale.
- Nvidia’s proposed guarantee could unlock financing for the campus’s electricity and construction costs.
- West Virginia granted the project state certification in September after months of negotiations.
- Nvidia committed $1 billion in convertible financing to Nscale in September.
Risks & concerns
- Nscale operated about 25,000 advanced AI chips in August, far below its planned deployment of nearly 500,000.
- Construction runoff from the West Virginia campus has flooded nearby homes more than once.
- Microsoft abandoned an England site in October after its grid connection was delayed into the 2030s.
- CoreWeave, Nebius and IREN each lost more than 30% in October as of last week.
- Blackstone warned Anthropic could receive a below-investment-grade rating after its IPO, increasing borrowing costs.
- A residual value guarantee would expose Nvidia to taking over the facility if Nscale defaults on construction payments.