Lambda gained a $500 million loan utilizing Nvidia chips as collateral

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Lambda gained a $500 million loan utilizing Nvidia chips as collateral
Lambda gained a $500 million loan utilizing Nvidia chips as collateral

Lambda has acquired a $500 million loan from lenders, including Macquarie Group, using Nvidia’s much-coveted processors as collateral, the specialist artificial intelligence cloud service disclosed.

Lambda has received a $500 million loan from lenders, including Macquarie Group (MQG.AX), with Nvidia’s (NVDA.O) much-coveted processors as collateral, the niche artificial intelligence cloud provider announced on Thursday.

Startups addressing the growing demand for chips and software capable of supporting AI’s sophisticated computing requirements have enticed private investors.

Firms have been vying to develop their own generative AI (genAI) services in order to get a foothold in the increasingly competitive artificial intelligence market.

This has heightened the attractiveness of rapid AI circuits with millions of transistors and their ensuing scarcity, making graphics processing units (GPUs) like those offered by industry leader Nvidia a valuable asset.

The so-called “special purpose GPU financing vehicle” via which Lambda obtained funding is an asset-based structure secured by GPUs and supported by their cash flow creation, according to the business. Asset-based financing includes lenders lending money against a company’s assets as security.

“Lambda will use the funding to dramatically scale its GPU Cloud, featuring NVIDIA H100s,” according to the business.

The funds will also be used to purchase Nvidia’s H200 chips as well as its latest Blackwell AI chips, the B200 and GB200.

The B200 AI chip will cost between $30,000 and $40,000, Nvidia CEO Jensen Huang told CNBC in March.

In November of last year, Nvidia announced that Lambda would be among the first cloud service providers to offer access to its H200 chips.

The financing, which included investment firm Industrial Development Funding, comes after a $320 million funding round led by billionaire Thomas Tull’s US Innovative Technology in February.

According to the firm, Lazard served as Lambda’s exclusive financial adviser and placement agent in this transaction.

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