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Data Centre Operator Vultr Raises $333mn to Expand AI-Powered Cloud Computing
Data centre operator Vultr has raised $333mn of capital from investors, including chipmaker AMD, in a bid to scale up its cloud computing platform and meet the growing demand for artificial intelligence (AI) and machine learning (ML) applications.
A New Era in Cloud Computing
The fundraising, led by investment manager LuminArx, values Vultr at $3.5bn, an unusually high valuation for a company that had not previously raised external equity capital. The average valuation for companies receiving first-time financing is $51mn, according to PitchBook. Vultr’s cloud computing platform allows customers to run applications and store data remotely, and the company plans to use the funds to expand its data centre offering and purchase graphics processing units (GPUs), the AI chips that have become the tech world’s hottest commodity.
The Rise of Neocloud
Silicon Valley has embarked on a frenzy of investment in AI data centres powered by GPUs, with the 10 biggest cloud companies, dubbed hyperscalers, on track to allocate $326bn to capital expenditure in 2025. While most depend heavily on chips made by Nvidia, large companies including Google, Amazon, and Facebook are designing their own customised silicon to perform special tasks. Away from the tech mega-caps, emerging "neocloud" companies like Vultr, CoreWeave, Lambda Labs, and Nebius have raised billions of dollars of debt and equity in the past year in a bet on the expanding power and computing needs of AI models.
Competition in the AI Chip Market
The market for AI chips is expected to be worth $276bn by 2027, according to Bank of America analysts. AMD, run by Lisa Su, is planning to roll out a new chip, the MI355X, to compete with Nvidia’s Blackwell range, which went into mass production during the current quarter. Vultr uses chips from both suppliers, and Chief Marketing Officer Kevin Cochrane said the capital raising gave the company "freedom and flexibility" regarding its investment decisions, and added that AMD and LuminArx were "long-term strategic partners."
Conclusion
Vultr’s fundraising and expansion plans reflect the growing demand for cloud computing and AI-powered services, as well as the increasing competition in the AI chip market. As the tech industry continues to evolve, companies like Vultr are well-positioned to take advantage of the opportunities presented by the rise of AI and ML.
Frequently Asked Questions
Q: What is Vultr’s valuation after the recent fundraising?
A: Vultr’s valuation is $3.5bn after the recent fundraising.
Q: What is the average valuation for companies receiving first-time financing?
A: The average valuation for companies receiving first-time financing is $51mn, according to PitchBook.
Q: What is Vultr’s plan for the funds raised?
A: Vultr plans to use the funds to expand its data centre offering and purchase graphics processing units (GPUs), the AI chips that have become the tech world’s hottest commodity.
