Cloud computing startup Lambda has struck a multibillion-dollar artificial intelligence infrastructure deal with Microsoft, powered by tens of thousands of Nvidia GPUs, in what industry analysts describe as the latest sign of a global “compute boom” triggered by the ongoing AI arms race.
The agreement, announced Monday, marks a major expansion of the two companies’ long-standing relationship, which dates back to 2018. The partnership is designed to bolster Microsoft’s access to GPU clusters for large-scale AI workloads and cement Lambda’s position as one of the most important independent providers of AI computing power.
“We’re in the middle of probably the largest technology buildout that we’ve ever seen,” said Lambda CEO Stephen Balaban in an interview with CNBC’s Money Movers. “The industry is going really well right now, and there’s just a lot of people who are using ChatGPT, Claude, and the different AI services that are out there.”
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While neither company disclosed the specific dollar figure, sources familiar with the matter told media outlets that the deal will span multiple years and involve the deployment of Nvidia’s cutting-edge GB300 NVL72 systems, the same chips being used by other hyperscalers like CoreWeave. These systems are designed for ultra-high-performance workloads such as training large language models and running massive inference operations.
Balaban praised Nvidia’s leadership in the GPU market, calling it “the best accelerator product on the market.”
Founded in 2012, Lambda provides AI cloud services, GPU rentals, and tools for training and deploying machine learning models, serving more than 200,000 developers worldwide. The company’s infrastructure allows research labs, startups, and enterprise firms to rent powerful GPUs on demand rather than build their own costly data centers.
The AI Arms Race and the Global Compute Boom
The Lambda–Microsoft deal reflects a broader transformation in global technology investment. Since the release of ChatGPT in late 2022, the race among firms to build and train more powerful AI models has triggered an unprecedented surge in demand for computing power, forcing hyperscalers, chipmakers, and specialized cloud startups into multibillion-dollar alliances.
The phenomenon has been likened to an “AI gold rush,” but instead of mining equipment, the precious resource is compute capacity—the ability to train, deploy, and scale artificial intelligence models using clusters of GPUs.
Tech giants such as Microsoft, Amazon, Google, Meta, and Oracle have committed hundreds of billions of dollars to expand their AI infrastructure, while companies like CoreWeave, Lambda, and Cerebras Systems have become key partners in supplying specialized computing resources.
Lambda’s partnership with Microsoft follows similar deals across the sector:
- OpenAI recently signed a $38 billion, seven-year agreement with Amazon Web Services to access hundreds of thousands of Nvidia GPUs.
- OpenAI has committed to spending $300 billion over the next five years to purchase compute capacity from Oracle, over the next five years.
- CoreWeave raised billions in funding from Nvidia and Magnetar Capital to rapidly expand its GPU data centers across the U.S.
Together, these agreements illustrate how the AI arms race is reshaping the global tech industry. What began as a software competition to build smarter models has evolved into a hardware race to secure computational dominance—with GPUs, data centers, and energy capacity now defining competitive advantage.
Lambda’s Expansion Plans
Lambda is already scaling aggressively to meet rising demand. The company operates dozens of data centers worldwide and is increasingly building its own infrastructure rather than relying solely on leasing. In October, Lambda announced plans for an AI factory in Kansas City, slated to open in 2026 with 24 megawatts of initial capacity, expandable to over 100 megawatts.
This expansion underlines how AI infrastructure companies are moving closer to the scale once reserved for hyperscalers.
Lambda is expected to gain both long-term stability and massive demand from one of the world’s most ambitious AI investors by aligning with Microsoft. Microsoft, for its part, secures more dedicated compute capacity outside its core Azure footprint, ensuring it can continue scaling services like Copilot and ChatGPT integrations without bottlenecks.
The sheer magnitude of the partnerships now being signed—ranging from billions to tens of billions of dollars—highlights artificial intelligence’s shift from just a software revolution to an infrastructure revolution reshaping the global economy.
Analysts expect the wave of AI-driven infrastructure investments to continue through the decade, with cumulative spending potentially reaching multitrillion dollars by 2030.