Lambda and CoreWeave Garnered NVIDIA's Favor

Amidst the shortage of graphics cards in the artificial intelligence industry, Andrej Karpathy of OpenAI said, "Now, 'who gets how many H100s and when' is the top gossip in Silicon Valley." In response, Stephen Balaban, CEO of Lambda Labs, stated, "Lambda will have thousands of H100s available before the end of the year - if you need 64 or more H100s, please message me."

H100 supplier NVIDIA and Lambda Labs are discussing financing, but it is unlikely that NVIDIA will participate in the upcoming round of financing. The specific reasons for NVIDIA's decision to stay out are not yet clear. However, it is worth noting that NVIDIA has already provided significant funding to another cloud computing partner, CoreWeave, in May.

Exclusive NVIDIA Chips

Lambda Labs and CoreWeave have become important players in the field of artificial intelligence, attracting NVIDIA's attention. With the continuous surge in demand for NVIDIA AI chips, these startups have seized the opportunity and flourished.

NVIDIA has shifted its supply to AWS, Microsoft, and Google Cloud through these two companies. These tech giants are not only customers of servers equipped with NVIDIA chips, but they have also developed their own AI server chips to compete with NVIDIA. It has been reported that OpenAI is also planning to develop its own AI chips.

However, the difference between Lambda Labs and CoreWeave and other companies is that they do not design their own chips. This difference makes them less of a threat to NVIDIA, while NVIDIA achieves diversification of its customer base by supporting these emerging cloud service providers. Both companies are addressing critical issues in the AI industry, particularly those related to NVIDIA's chip shortage.

This surge in demand has attracted the interest of investors, and it is worth noting that a well-known investment fund led by billionaire Thomas Tull is expected to contribute a significant portion to Lambda Labs' financing. Although the financing round has not been finalized, considering the influx of new capital, the valuation is expected to reach a considerable $1.5 billion.

Although investors are still somewhat cautious, fearing that this demand may be temporary, this may be precisely why NVIDIA favors these two companies.

NVIDIA's Favor Brightens the Future

Lambda Labs was founded over a decade ago and has become a strong competitor to AWS and Google in the field of server leasing equipped with NVIDIA chips. Recently, the company has experienced exponential growth due to the skyrocketing demand for NVIDIA AI chips.

Interestingly, compared to its larger competitor CoreWeave, Lambda Labs has significantly lower pricing. In relation to this, it has been reported that SoftBank Group is also considering investing in Lambda Labs.

In terms of financial prospects, Lambda Labs has tremendous growth potential. The company's revenue is expected to reach $250 million in 2023, doubling from the previous year. Looking ahead to the next fiscal year, Lambda Labs expects to achieve revenue close to $600 million.

CoreWeave is pursuing a different financial strategy. The company is currently attempting to sell employee equity at a valuation of $7 billion, which is 14 times its expected revenue of $5 billion for this year. Additionally, CoreWeave's forward-looking projections indicate ambitious goals in the AI field, with expected revenue of $2.3 billion in the next year.

Many companies are turning to the computing capabilities of Lambda Labs and CoreWeave, rather than relying on larger cloud service providers. Due to the surge in demand, these cloud service providers are struggling to provide GPU servers. Even major companies like Microsoft have become customers of CoreWeave and Lambda Labs, highlighting the importance of these startups in addressing urgent industry needs.