Nvidia Negotiates Residual Value Guarantee for Nscale's West Virginia Data Center Construction Debt
Nvidia is in talks to provide a residual value guarantee for Nscale's construction loans, shifting its financial support from leases to construction risk to sustain AI infrastructure buildout.
According to The Information and corroborated by Bloomberg, US chipmaker Nvidia is negotiating an arrangement to guarantee billions of dollars in debt financing for British AI cloud provider Nscale’s planned data center in West Virginia. This proposal marks a shift in how Nvidia supports the AI infrastructure ecosystem: while its previous financial backing primarily covered chip purchases and operational leases, the proposed “residual value guarantee” implies that if Nscale defaults during the construction phase, Nvidia would temporarily take over the facility and help find a new buyer or tenant.
The guarantee aims to help Nscale secure financing for electricity and construction costs at its West Virginia campus. The first 460-megawatt building of this project has already secured a $44.6 billion contract from Anthropic and is expected to use Nvidia’s next-generation Vera Rubin chips. Nscale is currently seeking a US listing with a target valuation of up to $35 billion, but faces significant headwinds: Microsoft recently canceled a lease agreement for Nscale’s Loughton site in the UK due to grid power delays, and Nscale’s Norwegian projects have encountered cooling leaks and regulatory hurdles. As of August, Nscale had deployed only about 25,000 advanced AI chips, far below its planned nearly 500,000.
Nvidia’s move reflects the industry’s response to growing investor anxiety over massive spending. According to The Information, Nvidia has extended roughly $170 billion in investments and credit support to neoclouds and large customers, including $1 billion in convertible financing committed to Nscale in September. With peers like CoreWeave and Nebius seeing share prices fall and bond yields spike, market focus has shifted from pure demand strength to the financing capabilities of builders. By assuming some construction risk, Nvidia attempts to maintain delivery timelines for its key customers, thereby protecting its own sales outlook.