Lambda Labs Investment Summary: AI GPU Cloud Provider Eyes IPO
Frank Gibbs December 23, 2025 1 min read
Lambda Labs Investment Summary: AI GPU Cloud Infrastructure
Lambda (formerly Lambda Labs) is an AI infrastructure company that rents out NVIDIA GPUs via the cloud for AI training, fine-tuning, and inference. Founded in 2012, they pivoted from facial recognition APIs to hardware sales, then to cloud GPU rental as AI demand exploded post-ChatGPT. They position themselves as a developer-friendly, competitively priced alternative to hyperscalers like AWS and Azure, and to their main competitor CoreWeave.
Financial Performance
- ~$500M annualized revenue run rate (May 2025), up from $425M in December 2024
- Revenue growth of ~60% YoY in Q2 2025
- Gross margins of 50% overall, 61% on cloud business
- Not profitable — lost ~$24M in H1 2025, but losses are narrowing as scale improves
- Highly capital-intensive model requiring significant upfront GPU and data center investment
Funding and Valuation
- Raised $2.3B+ total, including a $1.5B Series E in November 2025
- Last disclosed valuation was $2.5B (February 2025), but likely $10-15B post-Series E
- Investors include NVIDIA, ARK Invest, Andrej Karpathy, TWG Global, and Super Micro
Key Catalysts
- Multibillion-dollar infrastructure deal with Microsoft announced November 2025
- IPO targeted for H1 2026; Morgan Stanley, J.P. Morgan, and Citi engaged
- Planning new AI factory in Kansas City (2026)
Investment Risks
- Heavy reliance on NVIDIA as sole GPU supplier
- Intense competition from CoreWeave (already public) and hyperscalers
- Capital-intensive model with potential cash flow pressure if utilization drops
- Not yet profitable
Conclusion
Lambda represents a compelling play on AI infrastructure demand, with strong revenue growth and strategic partnerships. However, investors should weigh the capital intensity and competitive pressures against the potential upside from a successful IPO in 2026.