Lambda Labs

Sacra estimates that Lambda Labs hit $505M in annualized revenue in May 2025, up from $425M at the end of 2024.

The company's trajectory reflects accelerating adoption of its cloud GPU rental business, which now contributes the bulk of revenue, while legacy hardware sales make up a shrinking portion.

Lambda's positioning emphasizes competitive pricing—Nvidia H100 PCIe instances at roughly $2.49 per hour compared to $4.25 at CoreWeave—helping drive utilization and expand its customer base of developers and enterprises needing cost-efficient AI compute.

Gross margin year-to-date has been about 50%, or ~61% excluding non-cloud lines. Net losses were approximately $175M over that same period, narrowing as scale improves. Lambda was reported to be in talks to raise $350M in pre-IPO funding, with Mubadala Capital in discussions to lead the round at roughly a 20% discount to the eventual IPO price.

Lambda raised over $1.5B in a Series E led by TWG Global (Thomas Tull and Mark Walter), with participation from US Innovative Technology Fund and other investors in November 2025, bringing total funding to $2.3B.

In August 2025, Lambda also closed a $275M syndicated senior secured credit facility led by J.P. Morgan, with Citi, MUFG, and Crédit Agricole among the lenders, providing non-dilutive capital to expand its data center footprint and GPU fleet.

The company was previously valued at $2.5 billion following its $480 million Series D in February 2025, co-led by Andra Capital and SGW with participation from Nvidia, ARK Invest, G Squared, and Super Micro.

Notable investors include Nvidia, ARK Invest, Andrej Karpathy, and Bloomberg Beta.

In 2013, Lambda Labs launched its first product—a facial recognition API for Google Glass that let developers build AI-powered apps that could do things like remember faces and track down a specific face in a crowd, creating controversy and driving more than 5 million API calls every month.

In 2017, Lambda Labs pivoted to selling hardware built for AI and deep learning alongside their Face Recognition API, including a dedicated GPU laptop (the TensorBook), and physical workstations with 4 GPUs for more intensive training.

Lambda Labs sold their enterprise workstations and servers to customers like Amazon, Apple, Raytheon, and MIT, each one being pre-configured with TensorFlow, Pytorch, and Caffe to make it quicker to get started. The main customers of Lambda Labs were researchers working on the emerging fields of image recognition and speech generation, alongside early natural language processing.

Today, rebranded as Lambda (lambda.ai), the company is primarily a cloud platform that lets developers get access to on-demand, enterprise-grade cloud GPUs for AI development. The scarcity of GPU compute has been one of the key themes in the AI boom of 2023, with massive cloud providers like AWS struggling to meet demand due to chip shortages upstream at TSMC—creating an opportunity for new cloud providers like CoreWeave and Lambda that have beneficial relationships with Nvidia.

Lambda's cloud product has expanded well beyond single-node instances into a full-spectrum compute portfolio spanning multiple GPU generations. The company offers H100 SXM instances and production-scale "1-Click Clusters" on HGX H100 and HGX B200—including multi-node clusters offering on-demand access to 16–512 B200 GPUs connected via NVIDIA Quantum-2 InfiniBand. Lambda also operates the industry's first hydrogen-powered, production-grade NVIDIA GB300 NVL72 systems at ECL's Mountain View campus, where each system receives 142 kW of compute power. Looking further ahead, Lambda has announced bare-metal instances on NVIDIA Vera Rubin NVL72, a production-scale GB300 NVL72 supercluster with Quantum-X Photonics networking, and NVIDIA Vera CPUs—unveiled at GTC 2026—with Vera Rubin production availability and STX-based platform deployments planned for the second half of 2026.

Lambda Labs, like CoreWeave in the GPUs-on-demand space and like other cloud providers such as AWS, operates on a model where it rents out computing resources (such as GPU power) to businesses and developers over the cloud.

One key differentiation with Lambda Labs is that where CoreWeave is cloud-only, Lambda Labs also has on-premises options. Companies that want to get more compute for less money, ensure data security, and work on big datasets can purchase Lambda workstations without using them as a cloud provider.

The breadth of Lambda's customer base is underscored by the fact that Nvidia itself has agreed to rent back chips from Lambda—roughly 10,000 chips under one agreement plus a separate deal for 8,000 more. Lambda has also shifted from leasing third-party data center space toward owning and building its own facilities, a move that reduces long-term per-unit costs and increases control over infrastructure quality and capacity planning. That owned footprint includes a leased 21MW presence at Prime Data Centers' AI-ready campus in Vernon, California.

Lambda Labs incurs a significant upfront cost when purchasing GPUs and setting up data centers. However, these GPUs have a useful life of several years, during which Lambda Labs can continually rent them out. The operational costs include electricity (GPUs are power-hungry), cooling (to prevent overheating), and staffing (for maintenance and customer support).

Improving the efficiency of data center operations (e.g., reducing electricity consumption, negotiating better rates for electricity, or improving cooling systems) can lower operational costs and thus improve margins.

The cost of a GPU for Lambda Labs includes the purchase price and the operational costs over its lifespan. The revenue from a GPU is the cumulative amount paid by customers to rent the GPU over time. Lambda Labs aims to maximize the utilization of each GPU to ensure that the revenue generated far exceeds the cost.

Margins are generally lowest on Lambda Labs's higher-end GPUs. For example, a high-end H100 PCIe card might cost Lambda Labs roughly $30,000. That GPU is then rented out at an average of $2.49 per hour. Assuming an 80% utilization rate, it would generate roughly $17,268 in revenue per year ($2.49/hour × 19 hours/day × 365 days/year).

However, cheaper GPUs like the A10 could generate much greater margins. At 80% utilization, an A10—which Lambda Labs could have bought for ~$3,500 a few years ago and is now rented out at $0.75 per hour—could generate $5,201 in revenue every year.

The market for GPU cloud services is highly competitive, with several key players, including major cloud providers like Amazon Web Services, Google Cloud and Azure as well as upstarts like Lambda Labs and Together AI, each offering unique advantages and targeting different segments of the AI and machine learning industry.

The biggest long-term competition for Lambda Labs is likely to be the major three cloud providers: Google Cloud ($75B in revenue in 2023), Amazon Web Services ($80B in revenue in 2023) and Microsoft Azure ($26B in revenue in 2023).

With far greater revenue scale—vs. Lambda Labs's ~$250M in 2023—the big cloud platforms have the resources to invest both in acquiring GPUs and in developing their own silicon alternatives to Nvidia's GPUs.

However, between Lambda and the big cloud companies are also some "coopetitive" dynamics. In November 2025, Lambda announced a multibillion-dollar, multi-year agreement with Microsoft to deploy AI infrastructure powered by tens of thousands of NVIDIA GPUs, including GB300 NVL72 systems—positioning Lambda simultaneously as a competitor and a key supplier to one of its largest rivals.

Like Lambda Labs, CoreWeave is a public cloud provider that purchases GPUs from Nvidia and rents them out to AI companies and companies building AI features.

Lambda Labs is generally positioning itself as a better option for smaller companies and developers working on less intensive computational tasks, offering Nvidia H100 PCIe GPUs at a price of roughly $2.49 per hour, compared to CoreWeave at $4.25 per hour. On the other hand, Lambda Labs does not offer access to the more powerful HGX H100—$27.92 per hour for a group of 8 at CoreWeave—which is designed for maximum efficiency in large-scale AI workloads.

Together is fundamentally a GPU reseller that rents GPUs from providers like Lambda Labs and CoreWeave, big cloud platforms like Google Cloud, and from other sources—academic institutions, crypto miners, other companies—and then rents those GPUs out to startups and AI companies, then bundling that in with software for training and fine-tuning open source AI models like Meta's Llama 2, Midjourney's Stable Diffusion, and its own RedPajama.

Sacra estimates that Together hit $10M in annual revenue run rate at the end of 2023, with 90% of that revenue coming from Forge, their bundled compute-and-training product that launched in June 2023. Forge promises A100 and H100 Nvidia server clusters at 20% of the cost of AWS.

Looking forward, the key dynamics in understanding Lambda Labs's durable advantage hinges on (1) the long-term state of the GPU industry, (2) the market for on-premises AI hardware, and (3) Lambda's own infrastructure build-out.

At the root of the GPU shortage that has benefitted companies like Lambda Labs and CoreWeave to this point is a limitation at TSMC—Taiwan Semiconductor Manufacturing Company. The key shortage there is on chip-on-wafer-on-substrate (CoWoS) packaging capacity, which is used by all GPUs in the manufacturing process. Currently, TSMC expects that the current shortage will last until about March 2026. TSMC recently announced a plan to build a $2.9B packaging facility that will be operational in 2027, further alleviating shortages.

The major cloud providers, as well as companies like Tesla, Meta and OpenAI, wanting to escape the dynamics of this shortage, have all begun or accelerated work on their own AI processors. That said, they're also dependent on TSMC to actually make their chips—and with Nvidia being one of TSMC's biggest and longest-term customers, Nvidia could still have an advantage on manufacturing, at least until shortages are completely alleviated.

Lambda Labs, by offering on-premises workstations that can allow companies to train their AI models locally rather than in the cloud, is well-positioned to benefit from the rising tide of these kinds of workloads.

There are a few key reasons why companies would move their training on-premise vs. keeping it in the cloud, particularly as models improve and the need for compute ramps up further: cost, security, and big data.

Cost: Companies with stable, long-term compute needs might find that investing in on-premises infrastructure leads to lower total cost of ownership compared to continually renting cloud resources. This is particularly relevant for organizations that can efficiently manage and utilize their hardware over time.

Security: On-premises solutions can also provide businesses with control over their data, helping them meet stringent compliance requirements and data sovereignty laws by ensuring that sensitive data does not leave the company's premises.

Big data: When training AI models, it's often necessary to use large datasets of images, text, or audio files—so large that transferring them to a cloud-based environment for training can result in significant data transfer costs, also known as egress fees. These fees can add up quickly, especially when transferring large datasets, making it expensive to train AI models in the cloud. By keeping the data on-premises, organizations can avoid the costs associated with transferring data to and from the cloud.

Lambda is aggressively expanding its owned and leased data center footprint to increase capacity and reduce long-term reliance on third-party space. A 24MW AI Factory in Kansas City—expected to house more than 10,000 NVIDIA Blackwell Ultra GPUs with potential to scale past 100MW—is slated to come online in early 2026. A partnership with EdgeConneX adds more than 30MW of additional capacity across a 23MW single-tenant Chicago site and an Atlanta facility, both targeted for 2026 readiness. Together, these sites add meaningful owned and long-term-leased capacity ahead of anticipated demand growth tied to Lambda's frontier GPU roadmap.