Microsoft has launched a multi-billion AI infrastructure agreement with AI startup Lambda. Stephen Balaban, CEO of Lambda, joins CNBC's 'Money Movers' to discuss the terms of the deal, expectations for AI buildout, and much more.

The release of Open AI's ChatGPT has accelerated the development of artificial intelligence and warnings about its impact on society.

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Lambda has announced a multibillion-dollar agreement with Microsoft, under which Lambda will supply AI infrastructure powered by tens of thousands of NVIDIA chips. CEO Stephen Maliban highlighted the longstanding partnership between the two companies, which began in 2018, and emphasized Lambda's unique position as an AI cloud provider led by a machine learning engineer.

Maliban discussed the challenges and opportunities in expanding data center capacity, noting that most of the current business involves leasing data center space and renting out NVIDIA GPUs to customers like Microsoft. He also addressed the broader impact of data center expansion on local communities and the energy grid, as well as the strong demand for AI services that is driving industry growth.

Lambda CEO on new multibillion-dollar deal with Microsoft

Amazon, not the only hyperscaler with a big AI announcement today. Also breaking news out of Microsoft, launching a multibillion-dollar agreement with AI startup Lambda, with Lambda set to provide AI infrastructure powered by tens of thousands of NVIDIA chips. Joining us here at Post 9 this morning for an exclusive look at the news is Lambda CEO Steven Maliban. Steven, welcome. Good to have you. Carl, Sarah, thank you so much for having me. Walk us through the terms of this deal, and then I wonder, could you explain what it's like to be at the center of this ongoing maelstrom? Yeah. Well, so Lambda's had a really long-term relationship with Microsoft going back to at least 2018, and this is sort of a continuation of this relationship. We've built up a lot of trust and partnership between our two companies, and we're really excited to kind of take us to the next step. As far as what it's like to be in the middle of maybe one of the biggest infrastructural build-outs that we'll see in our lifetimes, and certainly one of the largest technological shifts in our lifetimes, of course, it's exciting, and, you know, just working hard and trying to deliver for our customers. The firm actually goes back to, is it 2012? 2012, yeah. So, yeah. What was the thinking at that point? Was any of this in view? Yeah. I mean, absolutely. So, I started training convolutional neural networks on a NVIDIA GPU under my desk, some workstations under my desk, and, you know, that was back in 2012. And, you know, today, I'd say pretty confidently that Lambda is one of the only AI cloud providers that has a CEO who's a machine learning engineer themselves. But you have the NVIDIA, right, GPUs in your data centers? That's right. So, we love NVIDIA's product. They have the best accelerator product on the market, and what we do is we buy those NVIDIA GPUs, and we put those into data centers, and then we rent them back out to our customers, such as Microsoft. How many data centers do you have? We have dozens at this point, and, you know, we're always expanding our footprint. The company is, you know, we're really excited to move into not just least data center space, but also, essentially, designing and constructing our own data centers going forward. Right. That's what we're looking as a goal. Yeah. Got a nice map here. Can you talk about how hard it is to procure them, and what you see as the evolutions to come in the next year or two? Yeah. So, this is how we generally look at the space. The data center footprint across the United States is largely sold out, you know, nearly full occupancy. We generally think that there is going to be a major push to see a lot more behind-the-meter power generation. So, you're going to start to see a lot more both solar, wind, natural gas, paired with things like battery electric storage systems to augment the grid. And basically, you're going to see essentially what our data center power plants be constructed going forward. And it's a phenomenally large infrastructural build-out. Is that an effort to sort of protect civilians, regular America, from these strains on the grid? So, I think that it's actually a huge opportunity for us to expand our grid. We haven't seen a major grid expansion in a long time. And I think that, overall, I think that the massive data center build-out that we're seeing right now is going to benefit all of the municipalities and all of the towns who are supporting it. I mean, there's going to be amazing jobs, literally billions of dollars invested into their communities. And I think that we're going to see some really major positive outcomes and side effects from that. How long does it take you to stand up a data center? So, what I've observed in the sort of industry, people generally have a kind of durational to, you know, from start to finish, you know, around the 24-month time period. Well, when we're leasing a data center, we're going to space that's, like, all ready to go. You know, we can do new deployments when data center space is ready to go in a matter of 45 to 60 days. So, is that most of the business now? It's the leasing? That's the business today, is that we lease data center space, we purchase NVIDIA GPUs, we then rent them back out to our customers. And NVIDIA has backed your company? NVIDIA is one of our investors, yes. We were just talking about OpenAI going public. There's chatter about you, too. Is that something you're thinking about? So, I can't really talk about what our plans are for financings and all that kind of stuff. But Lambda is just, you know, we're in the middle of probably the largest technology build-out that we've ever seen. The industry is going really well right now. And there's just a lot of people who are using ChatGPT and Cloud and the different AI services that are out there. And so, that sort of really strong consumer demand on the other side of that equation is really what benefits us. Yeah, definitely why we're tracking adoption curves and it's, we're really in the middle of it now. Hope you'll come back. Thank you. Really fascinating. Thank you, Stephen. Thank you.

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Lambda CEO on new multibillion-dollar deal with Microsoft

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