Nvidia Backs Lambda Labs in Massive $800 Million Capital Boost

Lambda Labs, a partner of Nvidia, is currently in talks to raise an additional $800 million, according to the Financial Times (FT) on June 29.

Lambda, a cloud infrastructure startup, rents servers that utilize Nvidia’s AI graphics semiconductors (GPUs).

This move aims to secure GPUs, which are currently in short supply, by leveraging the AI boom in the stock market.

If Lambda successfully raises an additional $800 million in capital, it will be among the top companies in Silicon Valley in terms of recent fundraising achievements.

In the current AI boom, financial strength is paramount.

This is because ultra-high-performance AI GPUs are used for building or training AI as well as for constructing servers and data centers. The GPUs are quite expensive.

Lambda previously secured $320 million in capital in February, at which time the company was valued at $1.5 billion.

In April, Lambda obtained a $500 million loan using Nvidia semiconductors as collateral.

This move effectively secured capital for additional purchases of Nvidia semiconductors to be utilized in the Lambda cloud.

This highlights the significant value of Nvidia semiconductors. While AMD and Intel have entered the AI semiconductor market, they have yet to match the capabilities of Nvidia semiconductors.

The terms of Lambda’s capital raising are expected to be announced in mid-July, with JP Morgan assisting in the process.

Lambda intends to use these funds toward acquiring Nvidia semiconductors, investing in complementary cloud network software, and expanding its workforce.

Meanwhile, CoreWeave, Lambda’s competitor, is also working hard to raise new capital.

In May alone, CoreWeave successfully raised capital twice, securing $7.5 billion through bond issuance and attracting $1.1 billion through stock issuance.

The company’s current value has risen to $19 billion. Nvidia strategically provides GPUs to both Lambda and CoreWeave.This move is aimed at competing against Amazon Web Services (AWS), Azure from Microsoft Corporation(MS), and Google Cloud, which dominates the top three spots in the cloud market share.

Amazon, MS, and Alphabet are all Nvidia customers, but they all aim to develop their own AI semiconductors to reduce their dependence on Nvidia semiconductors. This makes them potential competitors.

Nvidia is creating its demand by building an ecosystem through partnerships.