Lambda borrows half a billion bucks to grow its GPU cloud

Will buy tens of thousands of Nvidia's prized accelerators, which will be collateral for the loan

Lambda Labs, operator of a GPU-infused cloud, on Thursday revealed it has secured a $500 million loan to fund the expansion of its accelerators-as-a-service offering.

The deal – backed by Macquarie Group and Industrial Development Funding – will support the deployment of "tens of thousands" of Nvidia's fastest accelerators, which in turn will serve as collateral for the loan.

GPUs of the sort Lambda employs cost $30,000 to $40,000 a piece and are in incredibly short supply.

Lambda, which has worked on GPU systems for over a decade, has offered cloud services for the past six years. The company explained that the "asset-based" nature of the deal will allow it to rent out the accelerators to customers without long-term contracts.

Such contracts are typically the way to rent resources at the lowest possible rate. For example, on-demand pricing for Amazon's P5 instances, which include eight H100 accelerators, is $98.32 an hour, or about $12.29 per GPU. But if you commit to a three-year lease, Amazon will cut that down to $43.16/hr.

By contrast, it appears Lambda's strategy is to capitalize on demand from smaller AI startups hesitant to sign a long-term lease. Lambda lists a config comparable to AWS at $27.92 per hour.

The half billion dollars in debt financing comes in addition to the $320 million in Series C funding Lambda raked in back in February. At the time, Lambda reported the funding would go toward additional Nvidia H100, H200 and GH200 superchip capacity, along with an upgrade to its InfiniBand network.

Nvidia's H200, due out in Q2, is particularly notable as its larger HBM3e memory capacity – 141GB vs 80GB on the H100 – and faster memory bandwidth mean customers can run larger models on fewer GPUs.

If any of this sounds familiar, that's because Lambda is far from the only GPU cloud provider looking to cash in on the AI hype. Over the past few years we've seen bit barns like CoreWeave and Voltage Park appear and offer datacenters bursting with 10,000 or more GPUs available for rent at prices below those charged by larger cloud providers.

Many of these deployments have been funded by massive debt. For example, thanks to a $2.3 billion loan from Magnetar Capital and Blackstore, CoreWeave last northern summer expanded its datacenter footprint. ®

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