Nebius in Talks to Buy Israeli AI Startup AI21 After Nvidia Deal Fizzles
The Takeaway
- Nebius in talks to acquire Israeli AI startup AI21 Labs
- Israeli AI startup AI21 Labs was previously valued at $1.4 billion
- Deal by Nebius would expands AI services for cloud customers
Nebius, a cloud provider backed by Nvidia with a market cap of $32 billion, is in talks to buy Israeli-based AI startup AI21 Labs, according to people with knowledge of the deal.
The potential deal would help Amsterdam-based Nebius expand AI services for its customers beyond its main business of renting out servers. AI21 develops large language models and systems for enterprise agents. The Israeli-based startup, last valued at $1.4 billion in 2023, had discussed a sale to Nvidia last year, but the deal didn’t pan out, according to some of the people.
The discussions are ongoing and the companies may not reach an agreement. The potential acquisition price couldn’t be learned. Nvidia had considered buying AI21 for as much as $3 billion, Israeli news site Calcalist reported in December. The startup also held talks with other large technology suitors, according to one of the people.
The Nebius talks show the growing ambitions of upstart cloud providers including CoreWeave and Together AI. As demand for servers to run AI has surged over the last three years, they have been trying to diversify their customers and provide more AI tools to these developers.
“We do not comment on rumours and speculation. Nebius is building a full-stack AI cloud and we continuously evaluate opportunities to expand our platform to give AI builders and enterprises the capabilities they need,” said a Nebius spokesperson. AI21 founder Yoav Shoham declined to comment. A spokesperson for Nvidia didn’t have a comment.
AI21 Labs was founded in 2017 by Shoham, a Stanford University computer science professor who founded a calendar-scheduling startup acquired by Google; Ori Goshen, who founded telco analytics and network optimization startup CrowdX; and Amnon Shashua, CEO of autonomous driving company Mobileye, which Intel acquired in 2017 and spun out as a separately traded company in 2022.
As OpenAI’s ChatGPT took off, the startup tried to differentiate itself by providing models that are smaller and cheaper to run than those of other startups.
In 2023, the startup generated most of its revenue from Wordtune, an AI writing assistant for consumers, The Information reported at the time. In the past two years, it has pivoted to focus on building AI systems and specialized AI agents for enterprise customers. It employs about 200 people, according to LinkedIn.
Nebius was started in 2024 from the non-Russian assets of tech giant Yandex following Western sanctions on Russia in the wake of its invasion of Ukraine. Renamed Nebius, the company listed on the Nasdaq Stock Market in late 2024.
Revenue has been on a tear as Nebius has signed more large customers. Earlier this year, it announced Meta Platforms had struck a deal to spend $27 billion on its AI data centers over the next five years. Nebius has also been one of dozens of customers Nvidia has backed over the last few years. In March, Nvidia said it would invest $2 billion in Nebius.
It has already expanded beyond data centers. In February, it agreed to acquire Israeli startup Tavily, which develops search tools to help autonomous agents navigate the web. It also runs autonomous driving company Avride and ed tech business TripleTen and has stakes in database management startup ClickHouse and data labeling startup Toloka.
Other cloud and data center providers that have grown rapidly during the AI boom have also been buying software startups. Last year, CoreWeave bought Weights & Biases, a startup that helps developers build AI applications, for $1.7 billion. In August 2025, data center developer Crusoe purchased a Tel Aviv–based cloud computing startup, Atero, which develops software to improve the utilization and efficiency of graphics processing units.