Two fast-growing AI cloud companies, the UK’s Nscale and Australia’s Firmus, have deals that now depend on whether Nvidia keeps investing in its own customers. According to The Information, Nvidia’s recent run of investments is what’s propping up both companies’ funding plans. If the chipmaker slows down, both deals could stall.
The Quick Version
- Nscale: Nvidia is reportedly in talks to invest about $2 billion in Nscale’s pre-IPO round. Nscale has reportedly ordered around 194,000 of Nvidia’s upcoming Vera Rubin GPUs.
- Firmus: Nvidia is reportedly talking about putting several hundred million dollars into Firmus after the company dropped its IPO in October.
- Status: Neither deal has closed. Some reports say announcements may not come until early next year.
- Why it matters: Nvidia has become a lender of last resort for the AI cloud layer. That’s good for its GPU orders. It’s also a growing concentration risk.
What’s Happening
Nscale was valued at $14.6 billion in March after a $2 billion Series C. It has since delayed its IPO because investors were skeptical. Nvidia’s support goes beyond equity. Reports say Nvidia guarantees up to $860 million of rent for the first five years at Nscale’s Texas facility, and it’s negotiating more than $5 billion in guarantees for a West Virginia site. That second agreement still hadn’t been signed at the end of October.
Firmus scrapped its planned IPO in October. Nvidia has joined Firmus’ last three funding rounds. Under a planned deal, Firmus would buy Nvidia infrastructure through 2034 for a 170,000-GPU cluster in Batam, Indonesia.
In both cases, Nvidia invests in a company that then spends heavily on Nvidia hardware.
Why This Matters
Nvidia investing in its customers isn’t new. It has backed CoreWeave, Lambda, Crusoe and a long list of “neoclouds,” which are smaller cloud providers built specifically to rent out GPUs. What stands out now is how dependent these deals have become on Nvidia. Public markets didn’t want Firmus at its asking price, and Nscale had to push back its listing. Nvidia is stepping into the gap.
Critics call this circular financing. Nvidia’s money goes in, GPU orders come out, and those orders show up as Nvidia revenue. It works as long as end demand for AI compute keeps growing. If demand softens, the losses fall on the companies Nvidia has propped up, and some of that risk sits on Nvidia’s own balance sheet through rent guarantees.
The status quo is shifting, too. Until recently, neoclouds raised money from venture firms, private credit and IPO investors, and Nvidia was one backer among several. Now Nvidia looks like the backer that decides whether a deal happens at all.
What Practitioners Should Watch
If your team rents GPU capacity from neoclouds, this affects you directly:
- Supplier stability. Providers that depend on one strategic investor are more fragile. Check who’s financing your compute vendor.
- Capacity timelines. Nscale’s Vera Rubin build-out and Firmus’ Batam cluster depend on these funding rounds closing. Delays upstream mean slower capacity for customers.
- Pricing. If Nvidia pulls back, expect consolidation among smaller GPU clouds. Fewer competitors usually means firmer rental prices.
- IPO sentiment. Two AI infrastructure IPOs stalled or pulled in one season tells you public investors are tired of paying up for GPU-heavy business models.
What Comes Next
The big question is how long Nvidia will keep this up. Its cash pile can easily cover a few billion here and there. Still, every new guarantee adds exposure, and shareholders will ask whether Nvidia is creating demand or simply financing it. If both deals close early next year, expect more struggling neoclouds to come to Nvidia for money. If they don’t, the AI cloud market will probably go through a painful shakeout.
The Information’s original report has more detail on how the deals are structured.