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Lambda Labs, a cloud-computing startup that rents out servers equipped with Nvidia Inc.'s artificial intelligence chips, is in talks to raise another $800 million as it seeks to capitalize on the bull market for AI and a shortage of cutting-edge graphics processing units.
The proposed deal would put the company among Silicon Valley's most well-funded startups in recent years at a time when demand for computing infrastructure behind the generative AI boom is soaring.
The funding comes on top of $320 million the San Jose-based group raised in February at a valuation of $1.5 billion. Lambda also said in April it had secured a $500 million loan secured by its Nvidia chips to help expand its cloud services.
Lambda's rapid fundraising highlights the growing demand for Nvidia's GPUs, which are becoming a hot commodity as tech giants and startups like OpenAI, Anthropic and Elon Musk's xAI compete for so-called “computing” power.
A term sheet is expected to be released in mid-July, and JPMorgan is helping Lambda arrange the financing, though Lambda has not yet specified a revised valuation, according to three people familiar with the process. The proceeds will be used to buy more Nvidia GPUs and related cloud networking software, as well as to add to staff.
Lambda declined to comment.
Lambda, led by co-founder Stephen Balaban, has benefited from a close ties with Nvidia, which has grown to challenge Microsoft and Apple as the world's most valuable company, with a market capitalization of $3 trillion.
Chief Executive Jensen Huang has been focusing on GPUs such as Lambda and rival CoreWeave as he seeks to diversify Nvidia's customer base and create new rivals to cloud giants Google, Amazon and Microsoft — big tech companies that are not only Huang's customers but also rivals developing their own AI-specific chips.
Meanwhile, CoreWeave is valued at $19 billion and closed two deals last month, raising $7.5 billion in debt and $1.1 billion in equity.
It's unclear whether Lambda will take on new investors in the new funding round. In February, billionaire Thomas Tull's US Innovative Technology, B Capital, SK Telecom and investment giant T. Rowe Price were among Lambda's top investors.
Lambda raised $44 million in March 2023 with backing from Quora founder and OpenAI board member Adam D'Angelo, OpenAI president Greg Brockman, and Y Combinator CEO Garry Tan.
The California company originally focused on facial recognition, then moved into AI, then pivoted back to cloud computing after realizing it got more value from renting out its servers to other companies.
