SAN FRANCISCO — Lambda Inc. an AI cloud-computing provider, is selling a $917 million leveraged loan to fund a chip deal with Nvidia Corp. the latest sign that Wall Street has built a functioning debt market around GPU hardware.
Banks and technology firms have raised nearly $600 billion in debt globally since last year to support AI infrastructure buildouts. Lambda's transaction follows a financing structure pioneered by CoreWeave Inc. earlier this year, which marked the first time chips were financed in the institutional leveraged loan market.
Order books for Lambda's loan have reached almost $2 billion after a pre-marketing effort. Morgan Stanley is leading the transaction, with commitments due Thursday following a lender call Monday.
The debt carries an interest rate of up to 3.75 percentage points over the benchmark rate and is being offered at 99 cents on the dollar, according to details of the private transaction.
The loan matures in 4.4 years—well short of the seven-year standard for institutional loans—and is fully amortizing, meaning the principal is repaid over the life of the deal rather than in a lump sum at maturity. That structure eliminates refinancing risk for lenders and includes a call premium if Lambda redeems the debt early, giving it the character of a bond.
Lambda has also announced a multibillion-dollar partnership with Microsoft built around tens of thousands of Nvidia GPUs, which the companies are calling an AI Supercomputing Alliance.
Nvidia's strategy treats its hardware as a financial asset. The model—visible in both the Lambda and CoreWeave deals—lets cloud startups pledge GPUs as collateral, effectively converting chips into bankable commodities. CoreWeave recently paid elevated yields on a separate loan backed by customer contracts, a reminder that this collateral structure carries its own pricing risk.
Lambda Compute II LLC and Lambda Cloud Canada Inc. are the legal entities issuing the debt. The company offers on-demand and private GPU cloud services, including Nvidia H100, H200 and B200 chips.
