Exclusive: Alphabet's CapitalG, Nvidia in talks to fund Vast Data at up to $30 billion valuation, sources say

AI infrastructure provider Vast Data is reportedly in talks for a new funding round that could value the company at up to $30 billion, a substantial increase from its $9.1 billion valuation last year. Alphabet's CapitalG and existing investor Nvidia are in discussions to participate, underscoring the escalating investment interest in companies critical to the AI boom's foundational technology. Vast Data, which develops storage solutions for large AI data centers and projects annual recurring revenue to hit $600 million next year, is seen as a prime IPO candidate and attractive acquisition target, reflecting its strategic importance in the evolving AI supply chain.

Analysis

AI infrastructure provider Vast Data is reportedly in late-stage talks for a funding round that could escalate its valuation to as high as $30 billion, a more than threefold increase from its $9.1 billion valuation in 2023. The involvement of Alphabet's growth-stage venture arm, CapitalG, and existing backer Nvidia highlights the strategic importance of AI infrastructure as a key investment thesis. This potential investment is particularly significant for Nvidia, as it aligns with its strategy of building an integrated ecosystem around its core GPU business, similar to its previous acquisitions of Mellanox and Run:ai. Vast Data's reported financials underpin the high valuation, with the company being free cash flow positive and projecting a tripling of its annual recurring revenue (ARR) to $600 million next year from a strong base. The hiring of a former public company CFO and its superior technology relative to peers position Vast Data as a prime candidate for a future IPO or a strategic acquisition, making it a pivotal private company within the AI hardware supply chain.

Key Decisions for Investors

• For Nvidia (NVDA) investors, this development reinforces the company's strategy to build a defensible ecosystem beyond chips, potentially increasing its long-term moat and justifying a premium valuation.
• The potential up-round valuation of Vast Data signals continued intense private market appetite for AI infrastructure, suggesting investors should monitor the pre-IPO landscape for other 'picks and shovels' plays with strong revenue growth and a clear path to profitability.
• While this is a minor positive for Alphabet (GOOGL), it demonstrates a prudent strategy of using its venture arm to secure exposure to critical parts of the AI value chain without committing to a full-scale acquisition.
• Investors should watch for the final close of this funding round, as the final valuation and syndicate of investors will serve as a key benchmark for the private AI infrastructure sector and could signal the timing of a potential IPO for Vast Data.