Stay up to this point with free updates
Simply register for Artificial intelligence myFT Digest – delivered straight to your inbox.
Lambda Labs, a cloud computing startup that rents out servers powered by Nvidia's AI chips, is in talks to boost one other $800 million to capitalize on the bull market in artificial intelligence and the shortage of cutting-edge graphics processing units.
The planned deal would catapult the corporate into the ranks of Silicon Valley's best-funded start-ups of recent years – at a time when demand for the computing infrastructure behind the generative AI boom is rising rapidly.
The financing would 320 million USD which the San Jose-based group raised in February at a valuation of $1.5 billion. Lambda also announced in April that it had secured a $500 million loan using its Nvidia chips as collateral to finance the expansion of its cloud services.
Lambda's rapid funding round underscores the rising demand for Nvidia's GPUs, which have gotten a hot commodity as major technology firms and startups like OpenAI, Anthropic and Elon Musk's xAI compete for so-called “compute power.”
Term sheets are expected in mid-July, and JPMorgan helps coordinate Lambda's fundraising, which doesn’t yet include a brand new valuation, in accordance with three people conversant in the method. The capital will likely be used to purchase more Nvidia GPUs and related cloud networking software, in addition to hire more staff.
Lambda declined to comment.
Led by co-founder Stephen Balaban, Lambda advantages from its close relationship with Nvidia, which, with a market capitalization of three trillion US dollars, now challenges Microsoft and Apple because the most useful company on the planet.
CEO Jensen Huang has been selling his GPUs to firms like Lambda and its rival CoreWeave to diversify Nvidia's customer base and create latest competitors to cloud giants Google, Amazon and Microsoft. These Big Tech firms usually are not only Huang's customers, but additionally competitors which can be developing their very own AI-specialized chips.
CoreWeave has now reached a valuation of $19 billion and closed two deals last month wherein the corporate raised $7.5 billion in debt and $1.1 billion in equity.
It is unclear whether Lambda will tackle latest investors in a brand new funding round. In February, billionaire Thomas Tull's US Innovative Technology, B Capital, SK Telecom and investment giant T Rowe Price were Lambda's top backers.
Lambda 44 million USD raised in March 2023 with support from Quora founder and OpenAI board member Adam D'Angelo, in addition to OpenAI President Greg Brockman and Y Combinator CEO Garry Tan.
The California-based company initially focused on facial recognition before moving into AI, then later refocused on cloud computing after realizing its servers were more useful when rented out to others.
