Nvidia wins fast-growing AI startup Modal for new central processors

By Stephen Nellis

SAN FRANCISCO, Oct 19 (Reuters) - Nvidia has won central processor chip business with another fast-growing AI startup that until now relied entirely on chips from Intel and AMD, an early sign that its push into a market long controlled by those two rivals has traction.

Modal, a cloud-computing startup that rents out computing power to AI developers, said it plans to start using Nvidia's new Vera central processor for the first time for hosting agents, the AI systems that can carry out long-running tasks for human users. Modal until now has run such work only on Intel and AMD chips.

Modal last week raised $750 million in a funding round led by Accel at a $15.75 billion valuation, saying it is on track to record $1 billion in sales over the next year. Modal said usage of its services has tripled and revenue has grown more than 15 times year-over-year.

Modal said Monday that early tests showed the new Nvidia chip doubled the amount of work that AI agents can get done, prompting the company to support Nvidia's chip design for the first time, which will require some deep software changes on Modal's side.

But Chief Executive Erik Bernhardsson was careful to stress it is not abandoning its existing suppliers. The company said it will run the Nvidia chips alongside its current Intel and AMD offerings in a mixed fleet, putting each job on whatever hardware runs it best.

Bernhardsson said the tests were run against the Intel and AMD chips already on the market. Both Nvidia rivals are developing newer models that could narrow the gap with Nvidia.

"We'll test them when they're available," he said, adding that running a mixed setup means the company "can always deploy whatever hardware performs best."

Nvidia has told investors it expects to generate at least $20 billion from Vera chip sales this fiscal year, its opening bid for a market it values at roughly $200 billion. Nvidia has previously said OpenAI, Anthropic and Oracle also plan to use the chips, along with AI startups such as Perplexity.

(Reporting by Stephen Nellis in San FranciscoEditing by Nick Zieminski)