Nvidia Endorses Emerging Cloud Provider: Guarantees Over $5 Billion Construction Financing for Nscale

Nvidia is in talks with emerging AI cloud service provider Nscale, planning to provide several billion dollars in credit guarantees for the latter’s construction of a 460 MW data center in West Virginia, USA. This data center is dedicated to serving AI company Anthropic, and the two parties have already signed a $45 billion leasing contract.

According to the latest report from The Information, the guarantee is expected to exceed $5 billion. If the deal is finalized, it will further strengthen the chip supply ties between Nvidia and Anthropic—Anthropic is one of the world’s largest users of AI server chips, but has always employed a diversified chip procurement strategy and is not entirely dependent on Nvidia.

The agreement has not yet been signed, and the terms may still change.

Guarantee Structure: Residual Value Guarantee, Not Chips or Lease

According to sources, the guarantee will be structured as a “residual value guarantee,” with the collateral being the data center facility itself, rather than the lease or chips.

This structure will enable Nscale to finance the project with investment-grade ratings. If Nscale fails to make construction payments on time, Nvidia will step in to make payments and temporarily take over the facility, while also assisting in arrangements for resale or re-leasing.

Sources indicated this differs from Nvidia’s previous, larger credit support agreements—which typically covered customers’ data center leases or chip financing—whereas this one directly supports power and construction costs.

Behind the $45 Billion Contract: Nscale and Anthropic’s West Virginia Project

Nscale disclosed in its IPO prospectus last month that it had signed a $45 billion contract with Anthropic to lease the first 460 MW building at its Monarch data center campus in West Virginia. The facility will be outfitted with Nvidia’s latest generation Vera Rubin GPUs.

Industry estimates suggest that the shell cost for building a data center with 1 GW of power capacity is about $12 billion. Based on this calculation, the size of Nvidia’s credit support for Nscale’s project is likely to exceed $5 billion. Previous reports have indicated that construction costs continue to rise.

In addition, according to leaks, Anthropic also plans to lease a second-phase facility at the West Virginia campus, with the contract amount roughly equal to the first phase.

Nvidia’s Strategic Logic: Binding to Anthropic and Securing the Emerging Cloud Ecosystem

An industry investor analyzed that Nvidia’s core motivation in this move is to ensure Nscale’s success, thereby maintaining a deep connection with Anthropic.

Unlike most of its peers, Anthropic pursues a much more diversified chip procurement strategy and is not primarily reliant on Nvidia. If Nvidia can facilitate the Nscale project through credit backing, it is essentially securing a large-scale application scenario for its own Vera Rubin chips.

From a broader perspective, Nvidia’s largest traditional clients—Google, Microsoft, and Amazon—are accelerating their in-house development of server chips to reduce dependence on Nvidia. This makes emerging cloud providers like Nscale, CoreWeave, and Firmus (neocloud) increasingly strategically valuable to Nvidia. This summer, Nvidia even adjusted its revenue reporting approach to highlight the contributions of emerging cloud providers—a group that has become a primary focus since the GPU demand surge in 2023.

$170 Billion Ecosystem Bet: Nvidia’s Full-Fledged Emerging Cloud Strategy

To date, Nvidia has provided around $170 billion in credit support and investments to emerging cloud providers and other large clients.

Besides Nscale, Nvidia is also negotiating a potential investment of several hundred million dollars in Australian AI cloud service provider Firmus. Earlier this month, Firmus abruptly withdrew its IPO application, and according to The Information last week, Nvidia’s potential investment was one of the negotiation’s backdrops.

To support this ecosystem, Nvidia has formed a dedicated internal team, jointly led by Jensen Huang’s son-in-law Nico Caprez, to assist emerging cloud providers in finding data center locations with available power—a resource that is extremely scarce and requires substantial time, whether building independent power sources or connecting to the grid.

However, emerging cloud providers generally face severe financial pressure: most have yet to be validated by the market and must significantly increase revenue to repay the huge debts taken on to purchase Nvidia servers, while continually rising interest rates only add to the strain. Some industry executives believe that consolidation in the sector is inevitable. Whether Nvidia continues to support this ecosystem will directly determine the survival of some emerging cloud providers.