Nvidia in Talks to Give Credit Support to a Cloud Provider’s $45 Billion Anthropic Deal
The Takeaway
- Nvidia plans billions in credit guarantees for Nscale’s large data center.
- Nscale holds a $45 billion contract with Anthropic for the proposed facility.
- The deal helps Nvidia to ensure Anthropic will use more of its chips.
Nvidia is in talks to provide Nscale, a young AI cloud provider, with billions of dollars in credit guarantees for debt to develop a 460-megawatt data center that Anthropic plans to use, according to people with knowledge of the deal discussions.
The deal is not yet signed, and terms could change. But it is another example of how Nvidia has continued to provide financial support to so-called neoclouds like Nscale, CoreWeave and Firmus which have faced pressure from investors because of the debt those companies have raised to develop new facilities.
Nvidia has already helped support such neoclouds and other large customers with some $170 billion in credit support and investment. Nvidia has been in talks to invest hundreds of millions of dollars in Australian AI cloud provider Firmus, which abruptly pulled its initial public offering early this month, The Information reported last week.
The credit support for the Nscale facility in West Virginia is for power and construction of the facility. That makes it different from larger credit support agreements, which cover customers’ data center leases or their chip financing.
Nscale disclosed in its initial public offering prospectus that it has a $45 billion contract with Anthropic for the first 460 MW building of its Monarch data center campus in West Virginia that’s set to be filled with Nvidia’s newest Vera Rubin graphics processing units. The Nvidia credit support would likely amount to more than $5 billion, based on industry estimates that it costs $12 billion to build a 1 gigawatt powered data center shell. (Those costs have continued to rise, The Information previously reported.)
The agreement would be structured as a residual value guarantee for the data center itself, rather than the lease or chips, according to one of the people. It would allow Nscale to raise investment-grade financing for the project’s construction. If Nscale were to default on the construction payments, Nvidia would step in for payment and take over the facility in the interim while it helps arrange a sale and re-lease of the site, that person said.
Anthropic also plans to rent out a second phase of the West Virginia campus in a contract of roughly the same size, said the other person. Bloomberg first reported those deal talks.
One investor in the field speculated that Nvidia wants to ensure Nscale’s success because of the young firm’s connection to Anthropic, one of the largest AI server chip users. Anthropic, unlike most of its peers, has pursued a strategy of using many chip providers rather than primarily using Nvidia.