AI Agenda: Why Investors in GPU Resellers May End Up Disappointed

In the last year, Nvidia’s AI chips—GPUs in technical parlance—have become the hottest commodity that people are desperate to get a hold of. Lately, we’ve seen the emergence of startups known as GPU resellers or serverless GPU providers. 

These startups rent GPU servers from cloud providers or other companies that own such servers, including universities and crypto miners, and rent them out to AI developers at a slight markup. The startups often tack on additional software or features, such as software to help train AI models or easy access to open source models. And they’ve been getting lots of love from VCs as of late. Perhaps too much love, if you dig into their business models, as we’ve found.

Yes, these startups are showing rapid revenue growth—the service of one such firm, Together, is generating around $20 million in annualized revenue just four months after launching. But if investors have learned anything from the funding craze of 2021, it’s that revenue growth at all costs isn’t always the best strategy. They should apply that experience to this sector.