Investing.com -- Advanced Micro Devices (NASDAQ:AMD) and hedge fund LuminArx Capital Management have invested $333 million in a growth financing round for cloud startup Vultr, indicating growing demand for artificial intelligence (AI) infrastructure.
West Palm Beach-based Vultr, now valued at $3.5 billion, plans to use the funding to acquire more graphics processing units (GPUs), the chips that power AI models.
This funding marks Vultr's first receipt of outside capital. The company initially provided cloud-computing for businesses’ information-technology systems and now also offers AI computing. Vultr's AI cloud service, which leases GPU access to customers, is expected to become the largest segment of its business.
AMD views this investment as an opportunity for customers to experience its GPUs through Vultr's platform, according to Mathew Hein, AMD’s chief strategy officer of corporate development.
AMD plans to be Vultr’s preferred AI hardware provider, without enforcing this preference. Earlier this year, AMD introduced its latest generation of AI chips, the MI325X, and plans to release the next generation, the MI350 chips, next year.
Vultr recently announced plans to construct its first supercompute cluster, featuring thousands of AMD GPUs, at its data center in the Chicago area.
This investment in Vultr echoes similar moves by AI chip market leader Nvidia (NASDAQ:NVDA), which, along with other investors, provided over $400 million to AI cloud provider CoreWeave in 2023. CoreWeave also secured $2.3 billion in debt financing last year by using its Nvidia GPUs as collateral. Both Nvidia and AMD have expanded access to their GPUs among numerous cloud providers.
AMD's investment in Vultr is part of its strategy to increase competitiveness with Nvidia, according to Dave McCarthy, a research vice president in cloud and edge services at International Data Corp (IDC). McCarthy noted that AMD's association with an emerging cloud provider like Vultr could enhance its market visibility.
AMD has also invested in cloud providers such as TensorWave, which offers an AI cloud service. In August, AMD acquired data-center equipment designer ZT Systems for nearly $5 billion.
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