NVIDIA is expanding its presence in the GPU cloud market and is nearing the acquisition of LambdaLabs.

NVIDIA's role is shifting from a chip design company to a cloud service provider.

On July 18th, local time, the US technology media The Information reported, citing informed sources, that NVIDIA is nearing a deal to invest in cloud provider Lambda Labs. Earlier, NVIDIA had acquired Lambda's competitor, CoreWeave.

The total amount of new capital in this transaction could reach $300 million, and with the new capital included, Lambda Labs' valuation could exceed $1 billion.

According to the report, an NVIDIA spokesperson declined to comment. Lambda CEO Stephen Balaban refused to discuss the company's relationship with NVIDIA.

If the deal is reached, this will be NVIDIA's eighth investment in a private startup since March. Analysts believe that NVIDIA may sell GPUs to these cloud startups, thereby shifting the target customer base for GPUs from giants like Amazon, Microsoft, and Google.

After ChatGPT went viral, there has been a global competition in AI model development, leading to a further surge in GPU demand.

The report states that the high demand for NVIDIA's most popular GPU chip, the A100, has led Amazon, Microsoft, Google, and Oracle to restrict its cloud customers from renting it.

These giants are major customers of NVIDIA's GPU chips for AI servers, but they are also developing their own AI server chips and hope to sell them.

This means that they may become strong competitors to NVIDIA.

In contrast, Lambda and CoreWeave pose a smaller threat to NVIDIA. They do not design their own chips, so NVIDIA has ample reason to help them succeed.

Currently, cloud providers have not yet provided NVIDIA's latest chip, the H100, to customers on a large scale. However, when NVIDIA first launched it earlier this year, CoreWeave and Lambda were among the first companies to use it.

Lambda was founded in 2012, and in 2020 the company generated revenue of over $20 million. At that time, the company's main focus was selling GPU-driven computers, not GPU cloud server rentals. After the business transformation, it is expected that Lambda's annual revenue will reach hundreds of millions of dollars.

According to PitchBook, Lambda previously raised $72.5 million from venture capital firms such as Gradient Ventures under Google, Bloomberg Beta, and Mercato Partners.

NVIDIA's stock price has risen over 230% this year, with a market value exceeding $1 trillion. Its data center chip business has driven sales and profit growth.

Investors are betting that as NVIDIA replaces aging servers running traditional CPUs with servers that combine GPUs and CPUs on a single chip, this growth will continue.