Nvidia (NVDA) shares have momentarily dipped as news breaks regarding the company’s aggressive plans to secure a major data center lease in Storey County, Nevada. The significant project is set to be financed through a robust $3.8 billion junk bond issuance that has already garnered strong investor interest in infrastructure dedicated to AI workloads.
The upcoming data center is designed to boast a total capacity of 200 megawatts, signifying a crucial step in Nvidia’s ongoing strategy to establish long-term, proprietary infrastructure tailored for AI hardware demands. The lease term is an impressive 16 years, with options to extend for two additional periods of 10 years each, indicating Nvidia’s commitment to solidifying its operational landscape.
Strong Demand for Junk Bonds
The bond issuance has seen heightened investor appetite, leading to an increase of $150 million beyond initial targets. The deal is poised to yield approximately 6%, with backing from Tract Capital’s Fleet I fund, which will contribute around $620 million in equity to complement the debt financing.
The financing strategy is crucial for Nvidia, as it aligns with the company’s ambition to enhance its AI infrastructure capabilities. Notably, JPMorgan Chase is spearheading the bond offering, supported by Morgan Stanley as co-manager, with pricing expected to finalize on February 13.
Legal Approval for the Project
Nvidia’s data center will be located within Storey County, where Tract Capital has recently emerged from a multi-year legal dispute with Switch Data Centers over land use restrictions. A significant ruling in 2025 clarified that existing covenants do not impede the establishment of single-tenant facilities, effectively clearing the path for Nvidia’s data center aspirations. However, sources indicate that the financing for Nvidia’s lease should not be directly linked to this litigation.
Shifting AI Infrastructure Landscape
Traditionally, Nvidia has depended on external cloud providers such as AWS and Microsoft Azure to handle its AI workloads. However, this new 16-year lease marks a pivotal shift towards taking control over the design and operational aspects of their own facilities. By securing dedicated capacity, Nvidia is joining a growing movement among leading AI chipmakers and model developers aiming to reduce dependence on conventional cloud providers.
This project, situated within Fleet Capital’s broader Fleet Data Centers platform, is strategically designed to fulfill the unique needs of advanced AI workloads. As companies increasingly look to build their own infrastructures, the competitive landscape for AI computation may witness a dramatic transformation, giving early movers like Nvidia a significant edge.
In summary, as Nvidia forges ahead with this substantial investment in its data center capabilities, it not only underscores its resources to meet the surging demand for AI but also illustrates a significant shift in the strategies of tech giants. By establishing control over its infrastructure, Nvidia is poised to redefine its operational effectiveness while enhancing its innovative capabilities in the rapidly evolving AI sector.
