Nvidia-Backed Cloud Provider Lambda in Talks to Raise $350 Million Ahead of IPO
The Takeaway
- Lambda seeks to raise $350 million in pre-IPO funding
- Mubadala Capital in talks to lead round
- Startup plans second half IPO, slight delay from first half
Lambda, an upstart cloud provider that rents out Nvidia AI chips—and whose biggest customer was recently Nvidia itself—is trying to raise at least $350 million before a potential initial public offering this year, according to a person familiar with the discussions.
Mubadala Capital, which manages money for the United Arab Emirates government and other investors, is in talks to lead the funding round, which is structured to sell stock to investors at about a 20% discount to the price at which Lambda would sell stock in an IPO, the person said. It would be the latest in a string of AI-related deals by government-backed funds from the UAE.
The round would give Lambda more cash leading up to an IPO it has been planning for the second half of this year, according to two people who have spoken to the firm’s executives. That’s a slight delay from the company’s previous plans to go public in the first half of the year.
Spokespeople for Lambda and Mubadala declined to comment.
The terms of the new financing would pressure the company to list publicly. The deal, which is structured as convertible notes, would force Lambda to award participating investors millions of dollars of additional equity or cash interest payments if it doesn’t go public within a year, the person said.
Investors in the convertible notes would also have an opportunity to invest in the IPO, this person said. The newsletter Newcomer earlier reported some of Lambda’s funding plans.
A month ago, Lambda hired Heather Planishek, a former chief accounting officer at Palantir, as its chief financial officer.
Lambda’s fortunes in the public market are likely tied to investor sentiment about CoreWeave, a larger competitor that went public last March and is also heavily backed by Nvidia. CoreWeave shares are up more than 90% since the listing, but it has had a rocky few months. Its valuation has roughly been sliced in half since October as investors have worried about its large debt load and delays in its data center projects.
Founded in 2012 by brothers Michael and Stephen Balaban, Lambda is one of a cluster of firms that compete with huge cloud providers such as Amazon Web Services, Microsoft and Google to rent out specialized servers to AI developers.
Nvidia has backed several of these firms, known as neoclouds, as it hedges against the possibility that demand from larger cloud providers might cool. Nvidia also prefers some neoclouds because they are more likely to use a bundle of its hardware, networking equipment and chip software rather than customizing some of those features the way some large cloud providers do.
Lambda generated more than $520 million in revenue in the year that spanned October 2024 to September 2025, the person said. Third-quarter sales rose 80% from a year earlier, the company recently told investors. It lost about $175 million during that period.
Microsoft last fall signed a multibillion-dollar agreement to rent servers from Lambda. And last summer, Nvidia agreed to rent 10,000 of its own AI chips from Lambda for $1.3 billion over four years, and made a separate $200 million deal to rent 8,000 more Nvidia chips over an unspecified time frame.