Lambda eyes $12B valuation with $3B pre-IPO raise as AI cloud race heats up

Lambda is in talks to raise as much as $3 billion at a valuation of $12 billion or higher, a deal that would put the GPU cloud provider on a path toward a possible IPO. Bloomberg, citing people familiar with the discussions, said the company has already gathered multiple term sheets. The talks are still fluid, though, and the final size, price, and timing could all shift.

The California company is being pushed by a market that is moving fast and getting crowded. Lambda expects to bring in more than $1.5 billion in revenue in 2026, which is a sign that demand for AI compute is turning into real sales. But it is not alone in chasing the public markets or giant private rounds. CoreWeave went public in 2025, Crusoe has been chasing a much larger valuation, and Nscale is preparing a U.S. IPO as early as September.

Lambda was founded in 2012 by twin brothers Stephen Balaban and Michael Balaban in San Jose. Its business is straightforward: rent out GPU-heavy infrastructure to AI labs that do not want to buy and run their own data centers. That makes it part of the newer “neocloud” category, where the product is basically scarce AI hardware wrapped in a cloud service.

The company’s latest financing came in November 2025, when it raised more than $1.5 billion led by TWG Global. Earlier that year, in February 2025, it closed a $480 million Series D at about a $2.5 billion valuation. If the new talks land near $12 billion, that would put Lambda’s valuation at nearly five times that level in under two years.

The hard part is that public investors tend to ask uncomfortable questions about this business. GPUs are expensive, they wear out in accounting terms the second they’re installed, and Lambda is competing with CoreWeave, Crusoe, and Nscale for the same chips, the same power, and the same customers. Nvidia has already warned that AI server prices are rising by more than 15% because of memory shortages, which only makes the economics tighter.