Lambda takes on $1 billion in debt to supply Microsoft with Nvidia chips

AI cloud provider Lambda has raised about $1 billion in short-term private debt to buy Nvidia chips that it plans to lease to Microsoft. Lambda is one of the specialized cloud companies that buy costly AI hardware and rent out computing capacity, rather than operating a broad cloud service for every kind of workload; its Microsoft arrangement involves infrastructure built around tens of thousands of Nvidia processors. The deal illustrates the emerging financial model behind the AI buildout: smaller suppliers can fund huge hardware purchases around demand from major customers, but short-term borrowing also leaves them needing to repay or refinance quickly if those machines do not earn as expected.