Nvidia strikes $7B Poolside deal to rival DeepSeek, OpenAI

Nvidia ↗ 2.19% has agreed to pay $6 billion to license AI models from startup Poolside and will invest an additional $1 billion in the company, assembling a combined $7 billion commitment aimed at building a powerful open-weight AI model to compete with Chinese heavyweights like DeepSeek and Kimi K3, as well as American frontier labs including OpenAI and Anthropic.

The deal, first reported by Bloomberg on August 21, values Poolside at $12 billion on a pre-money basis — a fourfold jump from the $3 billion valuation the two-year-old startup reached last year. As part of the agreement, Nvidia will extend job offers to 109 Poolside employees, though the startup will continue to operate independently.finance.yahoo+2

An Open-Weight Challenge

The Wall Street Journal News Corp ↗ 0.29% reported on Friday that Nvidia plans to use the deal to build one of the world's most powerful open-weight AI models, presenting a direct challenge not only to Chinese competitors but also to closed-model American companies like OpenAI and Anthropic. Open-weight models are generally cheaper to run and allow developers to freely customize the technology — a strategic priority for Nvidia as it seeks to prevent AI from concentrating in the hands of a few large players.wsj

The licensing agreement is non-exclusive, meaning Poolside can still sell its technology to other buyers. What Nvidia gets is access to Poolside's "Model Factory," a platform for producing generative AI models tailored to software development. Poolside has already released several open-weight coding models under its Laguna line, including Laguna S 2.1, a 118-billion-parameter model that the company says matches or beats open models several times its size on coding benchmarks.venturebeat+1

A Pattern of Megadeals

The Poolside agreement follows a now-familiar playbook for Nvidia. In December, the chip giant struck a $20 billion deal with AI chip startup Groq, licensing its technology and hiring most of its employees and founders. Both deals are structured as licensing arrangements paired with talent absorption, allowing Nvidia to rapidly acquire capabilities without traditional acquisitions.fortune+1

Nvidia's push into open-weight models also carries geopolitical undertones. The Trump administration has been weighing measures that could restrict the use of Chinese open-weight models, a prospect that prompted 25 American companies — including Nvidia, Meta ↗ 1.97%, and Microsoft ↗ 0.90% — to urge the government against imposing bans, warning in an open letter that restrictions would shift the market toward a few closed developers rather than strengthen U.S. technological leadership.forklog

What Comes Next

The deal underscores how aggressively Nvidia is moving to pair software capabilities with its hardware dominance. Existing Poolside backers will receive a payout of $76.20 per share by the end of 2027 as part of the arrangement. For Nvidia, the bet is that an open AI ecosystem will drive future demand for its chips and systems — a wager now backed by billions of dollars and a growing roster of acquired talent.newcomer