Billionaire Jeff Bezos is backing a computer company that is challenging Nvidia’s (NVDA) dominance in the artificial intelligence chip market.
Bezos Expeditions, the private investment vehicle of the Amazon (AMZN) founder, was part of a $693 million funding round for Tenstorrent, the company announced Monday. He joined LG Electronics and Fidelity in the round led by South Korean companies Samsung Securities and AFW Partners.
“We are excited by the large number of investors who believe in our vision,” said Keith Witek, Chief Operating Officer of Tenstorrent, in a statement. “When you look at this group, you see a balance of financial investors and strategic investors, as well as some notable individuals who are convinced of our plans for AI.”
Tenstorrent said it will use the money to “build out open-source AI software stacks, hire developers, expand its global development and design centers, and build systems and clouds for AI developers.”
The company has strived to provide more accessible and affordable solutions for companies looking to develop their AI capabilities, putting itself in direct competition with Santa Clara, California-based company Nvidia. So far, it has signed about $150 million in contracts, Tenstorrent said.
Nvidia, currently the second most valuable company in the world behind Apple (AAPL), is a Wall Street powerhouse and a behemoth in AI chips. Last month, the company reported $35.1 billion in revenue for its fiscal third quarter, with 36% of that revenue — or $12.6 billion — coming from just three undisclosed customers. According to the documents, these sales are mainly attributable to Nvidia’s Compute & Networking segment.
While Nvidia won’t reveal its customers, the top buyers are likely to be Google (GOOGL) parent Alphabet, Meta (META), Microsoft (MSFT) and Tesla (TSLA) – all of which are major players in the AI boom.
But smaller companies are struggling to build their AI capabilities as Big Tech companies take over the market – and power-hungry AI chips remain prohibitively expensive.
That’s where Tenstorrent hopes to come into the picture. Founder and CEO Jim Keller told Bloomberg that Tenstorrent uses open-source and everyday technology to provide technical solutions that bring AI within reach of more companies, skipping costly and complex components, including high-bandwidth memory (HBM) used by Nvidia.
“You can’t beat Nvidia using HBM because Nvidia buys the most HBM and has a cost advantage,” Keller said. “But they will never be able to bring the price down as HBM is built into their products and sockets.”
Open source technology has become increasingly popular thanks to the boom in AI, given its cost-effectiveness. Meta founder and CEO Mark Zuckerberg said the company’s first open-source, multi-modal major language model, Llama 3.2, will be the way forward.
“It’s a bit like the Linux of AI, and we’re seeing closed-source labs respond by trying to lower their prices to compete with Llama,” he said at Meta’s annual Connect conference in September.
Elon Musk’s AI startup xAI also made its chatbot, Grok-1, an open-source model.
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