Nvidia has secured a deal to supply central processing units (CPUs) to fast-growing artificial intelligence startup Modal, marking a significant step in its push to challenge Intel and AMD in a market long dominated by the two chipmakers.
Modal, a cloud-computing company that rents computing power to AI developers, said on Monday it plans to begin using Nvidia’s new Vera processors to host AI agents, systems capable of carrying out extended tasks on behalf of users.
The startup has relied exclusively on processors from Intel and AMD for these workloads but said early tests showed Nvidia’s new chip doubled the amount of work its AI agents could complete.
The results prompted Modal to support Nvidia’s processor design for the first time, although the company said adopting the chips would require substantial changes to its software.
Modal Chief Executive Erik Bernhardsson stressed that the move did not mean the startup was abandoning its existing suppliers. Instead, it plans to operate a mixed fleet of Nvidia, Intel and AMD processors, assigning workloads to whichever hardware delivers the best performance.
Bernhardsson said the initial tests compared Nvidia’s Vera processors with Intel and AMD chips already available on the market. He noted that both rivals were developing newer processors that could narrow Nvidia’s performance advantage.
“We’ll test them when they’re available,” he said, adding that the mixed setup would allow Modal to deploy whichever hardware performed best.
The deal comes as Nvidia expands beyond its established strength in graphics processing units (GPUs), which are widely used to train and run AI models, into the central processor market traditionally dominated by Intel and AMD.
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The company has identified CPUs as another major growth opportunity as demand increases for the computing infrastructure needed to run increasingly complex AI applications, including autonomous AI agents.
Nvidia has told investors it expects to generate at least $20bn in revenue from Vera processor sales in the current fiscal year. The company has valued the potential market at approximately $200bn.
Other major technology companies and AI developers have also expressed interest in Nvidia’s new processors. Nvidia has previously said OpenAI, Anthropic and Oracle plan to use the chips, while AI search startup Perplexity has also announced plans to adopt them.
Modal’s decision provides an early indication that Nvidia’s CPU strategy is gaining traction among cloud-computing providers, although competition from established chipmakers remains strong.
The startup is also experiencing rapid growth. Last week, it raised $750m in a funding round led by Accel, valuing the company at $15.75bn.
Modal said it was on track to generate $1bn in sales over the next year, adding that usage of its services had tripled while revenue had increased more than 15-fold year on year.
The company’s adoption of Nvidia’s Vera processors could give the chipmaker another foothold in the infrastructure market supporting the development and deployment of AI applications, while allowing Modal to compare competing processors as newer products become available.
About the Author
Cecilia Attah is a tech analyst with a degree from Benue State University. She covers tech news and startups at TechRegard with a focus on how technology is transforming Africa and shaping the global landscape.
