Nvidia Invests $160 Million in Applied Digital to Boost GPU Data Center Demand

Applied Digital receives $160 million investment from Nvidia to boost datacenter chip demand

Applied Digital, a Texas-based firm that describes itself as a "designer, builder, and operator of next-generation digital infrastructure" for HPC applications, has confirmed a multimillion-dollar investment from industry leader Nvidia. The company announced that it had entered into an agreement with Nvidia worth $160 million. With the capital, Applied Digital will bring its data center and GPU cloud solutions to market "at scale" in order to deliver a "proprietary, purpose-built, hyper-efficient platform for the world's most advanced HPC and AI workloads." The Texas-based company is known for building water-cooled data centers optimized for AI workloads as well as for other cloud computing purposes. Last quarter, Applied Digital reported a net loss of $64.8 million on a revenue of $43.7 million - it attributed much of the loss to expenses related to equipment and facilities that were not yet operational or generating revenue. Applied Digital CEO Wes Cummins commented: "We're proud of our strong relationship with Nvidia, and the confidence that both they and Related Companies, along with institutional investors, have placed in us. Our team is eager to bring to market the vital capacity and contiguous, liquid-cooled IT environments that are tailor-made for AI, HPC, and other accelerated compute workloads." The $160 million deal will see 49.4 million shares transfer to Nvidia ownership at a price of $3.24 per share - the last closing price on September 4. In the days following the announcement, share prices climbed to $5.59. Nvidia has not commented on the deal. However, the company's investment may later form part of an investigation if the US DOJ decides to go ahead with an antitrust probe into the company's alleged habits of stifling competition. Previously, Nvidia affirmed: "Nvidia wins on merit, as reflected in our benchmark results and value to customers, and customers can choose whatever solution is best for them."

Nvidia joins $160M investment into data center builder Applied Digital - SiliconANGLE

Nvidia joins $160M investment into data center builder Applied Digital Applied Digital Corp., a Nasdaq-listed company that builds data centers for cloud providers and other organizations, has raised $160 million through a private placement. A private placement is a transaction in which shares are issued directly to investors rather than via a stock exchange. Applied Digital said in today's announcement of the deal that it sold 49.38 million shares for $3.24 apiece, its Tuesday closing price. The buyers included Nvidia Corp. and Related Companies LP, a major real-estate developer. Dallas-based Applied Digital builds data centers optimized for artificial intelligence workloads. The company doesn't equip its facilities with fans, the most common approach to regulating server temperatures, but rather uses liquid cooling equipment. The latter technology is widely used in AI clusters because it dissipates heat more efficiently than air. Besides cooling gear, Applied Digital also equips the data centers it builds for customers with networking hardware and related components. The company says that several of the systems in its data centers are implemented with backups. Should one of the systems fail, its backup component can come online to avoid an outage. Last month, Applied Digital disclosed that it has signed a letter of understanding to build 400 megawatts' worth of data center capacity for a U.S. cloud provider. One megawatt corresponds to the power consumption of several hundred households. Applied Digital said that the letter of understanding covers a 100-megawatt data center currently under construction in Ellendale, North Dakota and two upcoming facilities. The company's other source of revenue is a cloud business that leases graphics card clusters to customers. It offers access to Nvidia Corp.'s high-end H200 accelerators for AI workloads, as well as several other processors from the chipmaker. The list includes graphics cards such as the A40 that are geared primarily towards data visualization and rendering tasks. Applied Digital's cloud unit accounted for $29 million of the $165.6 million in revenue it generated during its fiscal year ended March 31. In the last three months of the year, the unit brought four new AI clusters online. It plans to launch two more over the next few months. According to the Wall Street Journal, Applied Digital will use the $160 million investment announced today to lay the groundwork for future debt financing rounds. That debt financing, in turn, will go towards expanding the company's North Dakota data center campus and cloud business. Applied Digital's raise comes four months after CoreWeave Inc., another AI data center builder that counts Nvidia as an investor, closed a $1.1 billion funding round. A few days later, CoreWeave announced plans to open two cloud facilities in the U.K. as part of a $1.25 billion infrastructure expansion initiative. The company has set a goal of expanding its data center network to 28 facilities by year's end.

Nvidia and co inject $160M into Applied Digital's GPU cloud

AI has made GPUs one of the hottest commodities on the planet, driving more than $30 billion in revenues for Nvidia in Q2 alone. But, without datacenters, the chip powerhouse and its customers have nowhere to put all that tech. With capacity in short supply, it's no wonder that VC and chipmakers alike are pumping billions of dollars into datacenters to keep the AI hype train from stalling. The latest example includes a $160 million investment by Nvidia and partners in Dallas, Texas-based bit-barn operator Applied Digital, which offers a variety of datacenter and cloud services built around Nvidia's GPUs. As one financial journal noted on Thursday, the DC operator will use the cash injection to accelerate development of a datacenter complex in North Dakota and support additional debt financing schemes to pay for the costly accelerators. With bleeding-edge GPUs commanding as much as a car these days -- $30,000 to $40,000 a piece in the case of Nvidia's upcoming Blackwell chips -- many datacenter operators have taken to using them as collateral to secure the massive loans. Applied Digital isn't even the biggest example lately. In July, AI datacenter outfit CyrusOne scored another $7.9 billion in loans to pack its facilities with the latest accelerators. That's on top of the $1.8 billion in capital the firm bagged this spring. CyrusOne isn't an isolated instance either. CoreWeave, arguably the biggest name in the rent-a-GPU racket, talked its backers into a $1.1 billion series-C funding round back in May. Only a few weeks later, CoreWeave had convinced them to shell out another $7.5 billion of debt financing. While multi-billion-dollar loans may grab headlines, most don't rise quite to that level. AI cloud upstart Foundry, for instance, managed to pick up $80 million in series-A and seed funding ahead of its launch in August. Even some chipmakers have been vying for their share of the funding while it lasts. Groq, which is unique in that its inference cloud isn't based on off-the-shelf GPUs and instead uses its custom language processing units (LPUs), scored $640 million to expand its offering last month. Meanwhile, Lambda, one of the original GPU-cloud operators, started the year with a $320 million funding round. Along with another $500 million in loans secured this spring, it now plans to add tens of thousands of Nvidia GPUs to its compute clusters. Unsurprisingly, there are a number of bit-barn operators looking to replicate this strategy. TensorWave is working to scale out compute clusters based on AMD's MI300X accelerators, while Voltage Park is following Lambda and others' lead and sticking with Nvidia GPUs. Those are just the ones that spring to mind, but the takeaway here is that it's a good time to be in the datacenter business, especially if those plans include renting out GPUs. Alongside the usual cast of VC firms, like BlackRock, Magnetar Capital, and Coatue, Nvidia has also got behind some of these endeavors, having previously thrown its weight behind CoreWeave. Nvidia's motivation in financing these projects is obvious. It can only sell as many GPUs as there is capacity for them. Once deployed, each of these accelerators also have the potential to generate $1/hour of subscription revenues if it can convince customers its Enterprise AI suite is worthwhile. A buck an hour might not sound like much, but, as we've previously discussed, it adds up pretty quickly when you're talking about clusters with 20,000 or more GPUs. It's not a bad deal for the datacenter operators or their financiers, either, so long as their revenues are enough to cover their loan payments anyway. That shouldn't be too much of a problem, according to our sibling site The Next Platform, which found that an investment of $1.5 billion to build, deploy, and network a cluster of roughly 16,000 H100s today would generate roughly $5.27 billion in revenues within four years. ®

Nvidia injects $160M into Applied Digital's GPU cloud

AI has made GPUs one of the hottest commodities on the planet, driving more than $30 billion in revenues for Nvidia in Q2 alone. But, without datacenters, the chip powerhouse and its customers have nowhere to put all that tech. With capacity in short supply, it's no wonder that VC and chipmakers alike are pumping billions of dollars into datacenters to keep the AI hype train from stalling. The latest example includes a $160 million investment by Nvidia and partners in Dallas, Texas-based bit-barn operator Applied Digital, which offers a variety of datacenter and cloud services built around Nvidia's GPUs. As one financial journal noted on Thursday, the DC operator will use the cash injection to accelerate development of a datacenter complex in North Dakota and support additional debt financing schemes to pay for the costly accelerators. With bleeding-edge GPUs commanding as much as a car these days -- $30,000 to $40,000 a piece in the case of Nvidia's upcoming Blackwell chips -- many datacenter operators have taken to using them as collateral to secure the massive loans. Applied Digital isn't even the biggest example lately. In July, AI datacenter outfit CyrusOne scored another $7.9 billion in loans to pack its facilities with the latest accelerators. That's on top of the $1.8 billion in capital the firm bagged this spring. CyrusOne isn't an isolated instance either. CoreWeave, arguably the biggest name in the rent-a-GPU racket, talked its backers into a $1.1 billion series-C funding round back in May. Only a few weeks later, CoreWeave had convinced them to shell out another $7.5 billion of debt financing. While multi-billion-dollar loans may grab headlines, most don't rise quite to that level. AI cloud upstart Foundry, for instance, managed to pick up $80 million in series-A and seed funding ahead of its launch in August. Even some chipmakers have been vying for their share of the funding while it lasts. Groq, which is unique in that its inference cloud isn't based on off-the-shelf GPUs and instead uses its custom language processing units (LPUs), scored $640 million to expand its offering last month. Meanwhile, Lambda, one of the original GPU-cloud operators, started the year with a $320 million funding round. Along with another $500 million in loans secured this spring, it now plans to add tens of thousands of Nvidia GPUs to its compute clusters. Unsurprisingly, there are a number of bit-barn operators looking to replicate this strategy. TensorWave is working to scale out compute clusters based on AMD's MI300X accelerators, while Voltage Park is following Lambda and others' lead and sticking with Nvidia GPUs. Those are just the ones that spring to mind, but the takeaway here is that it's a good time to be in the datacenter business, especially if those plans include renting out GPUs. Alongside the usual cast of VC firms, like BlackRock, Magnetar Capital, and Coatue, Nvidia has also got behind some of these endeavors, having previously thrown its weight behind CoreWeave. Nvidia's motivation in financing these projects is obvious. It can only sell as many GPUs as there is capacity for them. Once deployed, each of these accelerators also have the potential to generate $1/hour of subscription revenues if it can convince customers its Enterprise AI suite is worthwhile. A buck an hour might not sound like much, but, as we've previously discussed, it adds up pretty quickly when you're talking about clusters with 20,000 or more GPUs. It's not a bad deal for the datacenter operators or their financiers, either, so long as their revenues are enough to cover their loan payments anyway. That shouldn't be too much of a problem, according to our sibling site The Next Platform, which found that an investment of $1.5 billion to build, deploy, and network a cluster of roughly 16,000 H100s today would generate roughly $5.27 billion in revenues within four years. ®

Nvidia Backs Applied Digital, a GPU Data Center and Cloud Startup

Nvidia is part of an investor group that agreed to invest $160 million in Applied Digital, a publicly traded data center and cloud computing firm focused on Nvidia's artificial intelligence chips, Applied Digital said Thursday. Nvidia's involvement in the fundraising follows similar investments it has made in other cloud and AI startups, such as CoreWeave. Applied Digital develops data

Nvidia Contributes to $160 Million Applied Digital Funding Round | PYMNTS.com

Data center operator Applied Digital is the latest company benefiting from investors' artificial intelligence appetites. The firm raised $160 million in a financing round that included backers like AI chip giant Nvidia, The Wall Street Journal reported Thursday (Sept. 5). Applied Digital builds and leases out space in its data center to other companies, according to the report. It also launched an AI cloud-computing operation powered by Nvidia's chips. "We have been doing a lot with Nvidia, and I think we're unique in that we have both the cloud aspect and the data center build-out," CEO Wes Cummins said, per the report. "I think both are important to them." The company will use the new funding to fuel its growth and help shore up debt-financing deals for a data center effort in North Dakota, the report said. It also plans to expand its cloud-computing business. In other AI news, PYMNTS examined how generative AI has emerged as a major driver of innovation in automobile development and design. "The technology allows engineers to quickly explore numerous design variations, optimizing everything from vehicle aesthetics to performance attributes," the report said. "This shift is supported by compelling industry data." The PYMNTS Intelligence report "How Generative AI Is Boosting Innovation for Carmakers and Drivers" found that 93% of auto industry stakeholders said generative AI will have a significant impact on their field, while 75% plan to integrate it into their operations this year. The generative AI market in the auto sector is expected to balloon from $335 million in 2023 to $2.6 billion by 2033, representing a compound annual growth rate of 23%. "This anticipated growth underscores a commitment to the technology among research and development departments, with nearly 70% of decision-makers prioritizing its adoption," PYMNTS wrote.