Nvidia Partner Lambda Labs In Talks To Raise $800M To Expand AI Infrastructure And Meet Soaring Demand For GPUs And Cloud Services – NVIDIA (NASDAQ:NVDA)

In a bid to capitalize on the surging demand for AI computing, Lambda Labs, a Silicon Valley startup, is in discussions to raise an additional $800 million.

What Happened: The proposed funding would significantly boost the company’s valuation, placing it among the best-funded startups in Silicon Valley. The surge in demand for computing infrastructure that powers the generative AI boom is driving this move, reported the Financial Times on Saturday.

Lambda Labs, based in San Jose, recently secured a $500 million loan using its NVIDIA Corp NVDA chips as collateral. This loan was intended to finance the expansion of its cloud services. The company’s rapid succession of funding rounds underscores the increasing demand for Nvidia’s GPUs, which are now a sought-after commodity.

The proposed funding will be used to acquire more Nvidia GPUs and associated cloud networking software. It will also facilitate the hiring of additional staff. JPMorgan is expected to coordinate Lambda’s fundraising, with term sheets anticipated in mid-July.

Led by co-founder Stephen Balaban, Lambda has benefited from a close relationship with Nvidia, which has risen to challenge Microsoft and Apple as the world’s most valuable company, reaching a $3 trillion market capitalization.

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Why It Matters: The escalating demand for Nvidia’s GPUs is a testament to the growing significance of AI computing. This trend has been evident for some time. In March, Nvidia’s CEO Jensen Huang predicted that the AI computing industry was in its early stages and would see significant growth in the coming years. This prediction is now being realized with the increasing demand for AI computing infrastructure.

Moreover, the global trend of governments investing heavily in domestic AI infrastructure contributes to this surge in demand. This trend, advocating for sovereign AI investments, is expected to generate nearly $10 billion in revenue for Nvidia this year.

In March 2023, Lambda raised $44 million with support from Quora founder and OpenAI board member Adam D’Angelo, OpenAI president Greg Brockman, and Y Combinator CEO Garry Tan.

Meanwhile, Lambda’s potential $800 million funding round comes after the company raised $320 million in February, a move that underscored the escalating demand for Nvidia AI chips in the tech landscape. The investment fund, spearheaded by billionaire Thomas Tull, marked a pivotal moment for the 11-year-old startup.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote