Nvidia Commits $1.3 Billion to Rent 10,000 of Its Own AI Chips from Partner Lambda

Nvidia, a leading designer of graphics processing units (GPUs), has entered into a significant agreement to rent 10,000 of its own artificial intelligence chips from cloud infrastructure provider Lambda. The deal, valued at $1.3 billion over four years, underscores the intense demand for AI computing resources and represents the latest example of what industry observers describe as Nvidia's "circular financial arrangements." The Information first reported the arrangement.

This strategic move sees Nvidia, a key investor in Lambda, securing access to its own high-demand hardware through a partner it supplies. According to the tweet from Techmeme, the deal is a "circular financial arrangement," implying that Nvidia sells chips to Lambda, which then rents them back to Nvidia. This structure allows Lambda to expand its AI computing capabilities without needing substantial upfront capital for hardware, while providing Nvidia with guaranteed access to its chips for various internal or partner-driven projects.

Lambda specializes in providing GPU-powered cloud infrastructure for AI development, offering access to Nvidia's top-tier GPUs like the H100. The company has recently garnered significant investment, including a $320 million Series C round and a $480 million Series D round, much of which is allocated to purchasing more Nvidia GPUs. This influx of capital positions Lambda to scale its offerings, particularly as it reportedly prepares for an initial public offering (IPO).

The arrangement highlights the current landscape of the AI hardware market, where demand for advanced chips far outstrips supply. Even Nvidia, the dominant chipmaker, is navigating this scarcity, turning to partners like Lambda to ensure access to its own products. This dynamic has fueled a lucrative GPU rental market, with startups like Lambda playing a crucial role in connecting supply and demand for critical AI infrastructure.