Nvidia Eyes Lepton AI Acquisition to Dominate AI Server Rentals

Nvidia is reportedly nearing a deal to acquire Lepton AI, a two-year-old startup that rents servers powered by Nvidia’s AI chips, in a bid to strengthen its grip on the booming AI cloud market. The acquisition, valued at several hundred million dollars, would mark Nvidia’s latest move to diversify beyond hardware sales into enterprise software and cloud services.

Lepton AI specializes in renting access to servers equipped with Nvidia’s GPUs, targeting companies seeking cost-effective entry into high-performance AI computing without upfront infrastructure costs. Founded in 2023, the startup secured an $11 million seed round from CRV and Fusion Fund, positioning itself as a rising player in a market dominated by rivals like Together AI, which has raised over $500 million.

Nvidia’s interest stems from Lepton’s alignment with its hardware ecosystem. By integrating Lepton’s rental model, Nvidia could lock in customers who might later purchase its chips directly, while competing with cloud giants like Amazon Web Services and Google Cloud.

The deal reflects Nvidia’s strategic pivot toward cloud-based AI services, a sector projected to grow exponentially as businesses adopt generative AI and machine learning. Analysts note that owning a server rental platform could help Nvidia monetize its chips more flexibly, especially as demand for on-premises hardware faces headwinds from economic uncertainty.

However, the acquisition also raises questions about market consolidation. With Together AI already commanding significant venture capital, Nvidia’s entry could intensify competition, potentially squeezing smaller startups.

Nvidia’s reported interest in Lepton follows its acquisition of Gretel, a synthetic data startup, last week. The company’s stock has faced volatility, dropping 5.7% on March 26 amid broader market corrections, but analysts view these deals as long-term bets on AI’s infrastructure needs.