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Data center operator Vultr has raised $333 million in capital from investors including chipmaker AMD, betting that firms seeking to deploy artificial intelligence will seek alternatives to so-called “hyperscalers” like Microsoft and Google parent Alphabet.
The fundraising, led by investment manager LuminArx, values Vultr at $3.5 billion, unusually high for an organization that had not previously raised external equity. According to PitchBook, the common valuation of firms receiving initial funding is $51 million.
Vultr operates a cloud computing platform that enables customers to run applications and store data remotely. The 10-year-old company plans to make use of the funds to expand its data center offerings and buy graphics processing units (GPUs), the AI chips which have quickly change into the tech world's hottest commodity.
Silicon Valley has been rapidly investing in AI data centers with GPUs to develop large language models like Google's Gemini and OpenAI's GPT.
The 10 largest cloud firms – so-called hyperscalers – are on target to allocate $326 billion in investments in 2025, in keeping with analysts at Morgan Stanley. While most rely heavily on chips from Nvidia, major firms like Google, Amazon and Facebook develop their very own custom chips for specific tasks.
Away from the tech megacorporations, emerging “neocloud” firms equivalent to Vultr, CoreWeave, Lambda Labs and Nebius have raised billions of dollars in debt and equity over the past yr to capitalize on the growing performance and computing needs of AI models.
Compared to Nvidia, AMD is a distant second in developing GPUs, a part of a marketplace for AI chips that shall be price $276 billion by 2027, in keeping with analysts at Bank of America. AMD, led by Lisa Su, plans to introduce a brand new chip, the MI355X, to compete with Nvidia's Blackwell series, which entered mass production in the present quarter.
Vultr uses chips from each suppliers. Kevin Cochrane, chief marketing officer, said the capital raise gave the corporate “freedom and suppleness” over its investment decisions, adding that AMD and LuminArx are “long-term strategic partners.”
The race to coach sophisticated AI models has led to the commissioning of ever larger “supercomputers” that connect a whole bunch of 1000’s of high-performance chips. Elon Musk's startup xAI built its Colossus supercomputer in only three months and promised to grow it tenfold.
Meanwhile, Amazon is constructing a GPU cluster along with Anthropic, the developer of the Claude AI models. The e-commerce group has invested $8 billion in Anthropic.
Vultr's plan to expand its network of information centers, which currently spans 32 locations, is a bet that customers will seek greater proximity to their computing infrastructure as they move from training to “inference” – industry parlance for the Using models to perform calculations and make decisions.
