Feeding the hunger for Nvidia GPU access is big business

Feeding the widespread hunger for access to Nvidia GPUs, which was the top gossip of Silicon Valley last summer, has become big business across the AI industry.

For one thing, it has minted new unicorns: Today Lambda, a GPU cloud company powered by Nvidia GPUs announced it has raised a fresh $320 million at a $1.5 billion valuation. In a press release, the company said it will use the new equity financing to expand its AI cloud business.

The news comes just a day after The Information reported that Salesforce has invested in Together AI at more than a $1 billion valuation. And in December 2023, GPU cloud company CoreWeave boasted a jaw-dropping $7 billion valuation after a minority investment of $642 million led by Fidelity Management and Research Co.

Nvidia stock has tripled, AI startups desperate for GPU access

It is exactly one year since VentureBeat reported that many experts see the 30-year-old Nvidia — which enjoys more than 80% of the market for high-end AI chips — as the biggest potential winner in the red-hot generative AI space. Since then, the company’s stock has more than tripled and yesterday reports said Nvidia has surpassed Amazon and Alphabet in market capitalization.

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AI startups have become so desperate for access to Nvidia’s  hard-to-come-by, ultra-expensive, high-performance computing H100 GPU for large language model (LLM) training that investor and former GitHub CEO Nat Friedman announced yesterday that his team had even created a Craigslist for GPU clusters that offers listings like “32 H100s available from 02/14/2024 to 03/31/2024.”

In addition, Forbes reported yesterday that Friedman and his investing partner Daniel Gross had built their own supercomputer — now running the Andromeda Cluster, which is “several computing stockpiles totaling more than 4,000 GPUs, which they make available for use by companies in their portfolio for a fee below market price.”

Friedman told Forbes that he had become a full-time computer chip broker for upstart AI companies. “There were weeks where I spent most of my time finding GPUs for people,” he said. “Asking founders what they needed help with, that was problem number one.”

Sam Altman says we must reshape the AI chip landscape, but Databricks disagrees

The latest funding for companies offering access to Nvidia GPUs comes in the wake of last week’s Wall Street Journal report that OpenAI CEO Sam Altman wants to deal with the demand by reshaping the world of AI chips — with a project that could cost trillions and has a complex geopolitical backdrop.

But not everyone is on board: Databricks CEO Ali Ghodsi, for example, threw water this week on the entire GPU hunger games. He told The Information that he predicts a major drop in AI chip prices and a supply-demand rebalance over the next year.

Just as concerns about internet bandwidth evaporated in the 2000s, “the same thing will happen with GPUs,” he said in a conference call with The Information subscribers.

The question is, will it come in time to keep AI startups from GPU-starvation?

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