Nvidia Eyes OctoAI in $165M Deal to Boost AI Software Prowess

Nvidia is reportedly in advanced talks to acquire Seattle-based startup OctoAI for approximately $165 million. OctoAI specializes in software that enhances the efficiency of AI model operations, allowing developers to fine-tune AI models swiftly, regardless of the chip type used.

The proposed acquisition aims to bolster Nvidia's capabilities in software and cloud services. OctoAI, originally known as OctoML, was founded in 2019, evolving from a University of Washington open-source project, Apache TVM. The company shifted focus last year to a service that enables developers to optimize open-source or custom AI models efficiently across diverse processors.

Documents shared with OctoAI shareholders suggest the acquisition price might not yield significant returns for its shareholders, particularly earlier employees who exercised options at higher prices. OctoAI had previously raised $132 million from investors like Tiger Global Management and Madrona Venture Group, achieving a valuation of around $900 million in 2021.

Presently, OctoAI collaborates with Nvidia and other industry competitors, including AWS, AMD, and Qualcomm, providing developers tools to run AI models effectively on various chips. This breadth of collaboration might attract scrutiny from the U.S. Department of Justice regarding Nvidia's acquisition intentions, as similar deals are being monitored.

Nvidia's strategy has been to acquire smaller AI and cloud computing firms to enhance its offerings, addressing concerns about the high cost and demand for its chips. Earlier partnerships between Nvidia and OctoAI paved the way for this strategic move, with Nvidia previously facilitating OctoAI's access to its latest chips for testing model efficiency.

This acquisition aligns with Nvidia's recent expansions, following its purchase of several other AI-focused startups, aiming to make AI model deployment on its hardware more cost-effective and user-friendly. As Nvidia continues to strengthen its AI infrastructure, the OctoAI acquisition could play a pivotal role in its ecosystem.