Lambda in talks for $3bn pre-IPO funding

Lambda Inc., a GPU-focused AI cloud provider, is in talks to raise up to $3 billion in a pre-IPO funding round. The discussions are being held at a valuation of about $12 billion or more and remain confidential. Multiple term sheets have circulated, but no final agreements have been reached.

The prospective fundraise is described as ongoing, with key elements such as the ultimate size of the round, precise valuation and investor lineup still under negotiation. Participants in the talks have not been publicly identified, reflecting the private nature of the process.

The contemplated valuation of roughly $12 billion or higher would place Lambda among the larger private companies in the AI infrastructure segment. The company specializes in providing GPU-based cloud services, a capability that has attracted strong investor interest amid growing demand for AI computing power.

The funding round is seen as a step that could help prepare Lambda for an initial public offering as soon as next year. While there is no confirmed IPO timetable, the pre-IPO structure of the round and its potential size indicate a focus on scaling the business and strengthening its capital base ahead of a listing.

Lambda is backed by Nvidia (NVDA), a leading supplier of GPUs used for AI workloads. This relationship aligns with Lambda’s core focus on GPU-based cloud infrastructure and positions the company within a broader ecosystem centered on high-performance AI computing.

People familiar with the company’s performance say Lambda is expected to generate more than $1.5 billion in revenue this year. This revenue outlook underpins the targeted valuation and supports the rationale for a large pre-IPO raise. However, as the talks continue, all terms of the deal, including final valuation and total capital raised, remain subject to change.

The negotiations around the funding round are ongoing and confidential, with no public announcement of definitive terms. The use of multiple term sheets suggests that Lambda and potential investors are considering a range of structures and capital commitments.

Until an agreement is finalized, the size of the round, the list of participants and the precise valuation remain unsettled. The current discussions highlight both the scale of investor interest in AI infrastructure providers and the level of capital Lambda may seek to support its next phase of growth and potential move toward the public markets.