Cloud provider Lambda is raising up to $4 billion, valuing the company at $14.5 billion, according to The Wall Street Journal. This pre-IPO round, led by Coatue Management and Blackstone, comes with a backdrop of a significant increase in its backlog from $15 billion in June to $50 billion in September. Much of this growth appears to be driven by a $35 billion commitment from Anthropic, which signed a deal with Lambda in late August, showing how pivotal major contracts can be for cloud providers seeking to secure their market position.

The surge in demand for Lambda doesn’t come without its challenges. The cost to meet this demand, particularly in terms of data center buildouts largely funded by debt, is steep. Lambda has already raised an additional $1 billion last week, signaling a proactive approach to securing its financial future. This move not only sets the tone for its eventual IPO but also ensures it has more capital before the scrutiny of public markets.

With other neoclouds like CoreWeave and Nebius, also backed by Nvidia, now depending on the health of their stock for data center funding, the financial ecosystem for AI clouds is becoming increasingly intertwined. British neocloud Nscale recently filed for an IPO and is expected to begin trading soon, adding to the growing list of cloud providers in the AI race.

Despite the uncertainties, investors remain willing to bet on companies that can deliver the critical GPU capacity needed for AI, especially those with substantial contracts. Lambda’s decision to raise funds now is strategic, not only for its IPO but also to secure its position in a market where demand outpaces supply, making reliable GPU capacity a scarce commodity.