Nvidia Reportedly in Talks to Acquire Lepton AI for Hundreds of Millions, Eyeing Server Rental Market

Nvidia is reportedly in talks to acquire Lepton AI | TechCrunch

Nvidia is looking to get into the server rental market. The semiconductor giant is reportedly nearing a deal to acquire Lepton AI, a company that rents out servers that are powered by Nvidia's AI chips, according to The Information. The deal is reportedly worth several hundred million dollars, according to The Information, which cited unnamed sources. TechCrunch reached out to Nvidia for more information. Lepton AI was founded two years ago and raised an $11 million seed round in May 2023 from CRV and Fusion Fund. The other big player in the server rental market is Together AI, a startup that has raised more than $500 million in venture capital despite only being about a year older than Lepton.

Report: Nvidia close to acquiring AI cloud provider Lepton AI in nine-figure deal

Report: Nvidia close to acquiring AI cloud provider Lepton AI in nine-figure deal Nvidia Corp. is in advanced talks to acquire cloud startup Lepton AI Inc., The Information reported on Wednesday. Sources familiar with the matter told the publication that the deal could be worth several hundred million dollars. That would represent a major exit for Lepton AI's investors, CRV and Fusion Fund. The two venture capital firms led a $11 million seed round for the company about two years ago. Lepton AI was founded in 2023 by Yangqing Jia and Junjie Bai, former researchers at Meta Platforms Inc.'s artificial intelligence lab. The duo helped develop several industry-standard AI tools including PyTorch, the Facebook parent's popular model development framework. Lepton AI reportedly has about 20 employees and counts multiple venture-backed startups among its customers. The company's namesake cloud platform is optimized for AI workloads. Customers can use it both to train AI models and perform inference, the task of running a neural network in production once it's trained. Lepton AI provides a visual interface for setting up training clusters in its cloud. The company offers a choice of several Nvidia graphics cards. For teams that train multiple models side-by-side, the platform provides a tool that can be used to centrally manage the amount of hardware assigned to each project. During training, AI models sometimes encounter errors that can decrease their output quality. Lepton AI's platform provides features for detecting such errors. It also spots more subtle technical issues, such as cases when a neural network might be using more memory than it should during training. After development of a model is complete, Laptop AI customers can deploy it on inference-optimized instances in the company's cloud. The platform promises to provide processing speeds of more than 600 tokens per second while keeping latency under 10 milliseconds. An auto-scaling feature automatically adds more hardware resources to customers' inference environments when demand increases. Lepton AI speeds up inference using open-source tools such as vLLM. The technology consolidates similar LLM prompts into a single request, which reduces the amount of processing a model must perform. Developers also use vLLM to reduce their models' memory footprint. It's unclear whether Nvidia is seeking to acquire Lepton AI for its machine learning talent or plans to continue offering the startup's cloud platform. The platform competes with the offerings of several major Nvidia customers. One of those customers, AI cloud operator CoreWeave Inc., plans to hold its initial public offering later today. The report that Nvidia could buy Lepton AI comes days after word emerged about the company's acquisition of Gretel Labs Inc., another venture-backed AI startup. The latter deal was reportedly valued above $320 million. Gretel provides tools for creating synthetic data, automatically-generated data that can be used to train AI models.

NVIDIA could soon strengthen its position in the AI market even more

TL;DR: NVIDIA is reportedly considering acquiring Lepton AI, a company renting servers powered by NVIDIA's AI hardware, to strengthen its position in the cloud-based AI computing market. This move aligns with the growing demand for cost-effective AI server rentals, allowing companies to access high-performance computing without significant infrastructure investment. A new report has claimed NVIDIA is eyeing a potential acquisition of Lepton AI, a company that rents out servers that are powered by NVIDIA's AI hardware. The report comes from The Information, which writes the green semiconductor giant is currently engaging in talks to move into the server rental market with the acquisition of Lepton AI in a deal worth several hundred million dollars. If true and the deal was inked, it would give NVIDIA a stronger foothold in the cloud-based AI computing market and the greater artificial intelligence sector. As for the AI server rental market, reports indicate that it's an extremely fast-growing sector. Lepton AI was founded two years ago but secured an $11 million seed funding round from investors CRV and Fusion Fund. Lepton AI has positioned itself well in the emerging market as companies are looking for cost-effective ways of accessing high-performance AI computing hardware without having to fork out hundreds of thousands or potentially millions of dollars in AI server infrastructure, hence it attracting attention from NVIDIA for a potential acquisition. NVIDIA getting into the AI server rental market makes sense considering its hardware is renowned as the best-in-class for AI workloads, which are only becoming more performance demanding. NVIDIA being able to provide a cost-effective option to companies to begin working with AI servers makes sense, and will likely result in those companies testing the waters purchasing more hardware from the semiconductor company -- if their experience on the rented AI servers proves fruitful.