The Pentagon is in talks to loan Fluidstack $5 billion from its Office of Strategic Capital, a government-backed funding instrument.

The Pentagon is reportedly in talks with AI cloud provider Fluidstack regarding $5 billion in debt funding, according to the Wall Street Journal, which cited people familiar with the matter. The loan would be provided by the Pentagon's Office of Strategic Capital.

The funding is intended for manufacturing capacity for data center-related components rather than expanding Fluidstack's data center footprint. However, the deal has not been finalized and remains subject to change. A Pentagon spokesman told the WSJ: "The Department does not comment on transactions that are either pending or in the middle of negotiations until the press release comes out."

Fluidstack is an AI cloud company originally founded in 2017 in London that has since relocated its headquarters to the United States. The company is currently building data center capacity across multiple U.S. locations, including New York, Indiana, Louisiana, and Texas.

The company maintains ongoing partnerships with Google and Anthropic. Under the arrangement with Google, the tech giant guarantees data center deals to help Fluidstack raise funding at favorable rates. Should Fluidstack fail to follow through on its commitments, Google will assume the lease or pay any termination fees. Anthropic is positioned to lease compute capacity from Fluidstack, including Google's TPUs.

The Pentagon's Office of Strategic Capital provides loans to companies engaged in work deemed critical to U.S. national security. Previous recipients of such funding have included rare-earth suppliers and drone manufacturers.