Dell Inks $150 Million Hardware Deal With AI Startup Imbue

Dell has been telling investors its server business is poised to benefit from AI uses.

Bloomberg News

November 28, 2023

3 Min Read
Dell Technologies sign on a road

(Bloomberg) -- Dell Technologies Inc. has landed a $150 million deal to provide computing hardware to artificial intelligence startup Imbue, a win for the technology giant as it looks to grow its footprint in the AI market.

Dell is supplying Imbue with servers to enable the startup to process the vast amount of data needed to develop its AI systems and build models with advanced reasoning capabilities. Imbue, which raised $200 million in a recent funding round from firms including Nvidia Corp., is one of a handful of artificial intelligence startups building their own AI foundation models from scratch — an ambitious effort that requires a large volume of computing power.
In the year since ChatGPT launched and kicked off a frenzy around all things AI, Microsoft Corp., Alphabet Inc's Google and Inc. have moved aggressively to partner with artificial intelligence startups through investments and cloud computing deals. Dell, by comparison, is a smaller provider in the field — but it's been telling investors its server business is poised to benefit from AI. 

“We're interested in supporting all of the vibrant innovation that's going on in this space,” Matt Baker, senior vice president of AI strategy at Dell, said in an interview. “The entirety of our business is pivoting to support what we believe is a once or twice in a lifetime opportunity. The innovation that generative AI is driving is rivaling the arrival of the internet.”  

Unlike with other notable cloud deals between AI startups and bigger tech companies, Imbue has an agreement to buy computing hardware upfront rather than receiving cloud services. Companies like Amazon and Google have partnered to essentially rent cloud computing to AI startups. Imbue said the arrangement with Dell is cheaper than accessing computing services through a big cloud provider and offers the startup more flexibility so it’s not overly reliant on any one large tech company. 

“The main reason we went with Dell is that we don't want to be locked into a computing provider,” said Josh Albrecht, co-founder and chief technology officer of Imbue. If the company had gone with a larger cloud provider like Google or Amazon, he said, “it would make it much harder for the software side to move off of that in the future. This allows us to be able to remain independent.”

Baker said that with this partnership, Dell was showing AI startups that they “don't necessarily need to turn to a public cloud provider. These are things that you can actually own, install and innovate on your own.”

Imbue and Dell said they designed the custom system to include smaller “clusters” — or a collection of servers that can be used together like one powerful machine — to support rapid experimentation in developing AI systems. Dell is also offering a large cluster that’s better suited to building foundation models — AI systems that can be adapted to a wide range of tasks. Imbue’s computing system is managed by another firm, Voltage Park.

Founded in 2021 and now valued at more than $1 billion, Imbue is developing early prototypes of “agents” — or  AI tools that can automate more sophisticated tasks for users. Those tasks include analyzing bugs in code, interpreting lengthy documents and eventually planning vacations without supervision from users. The ultimate goal, according to the company, is to build agents with advanced reasoning capabilities that could, for example, help engineers write code and assist analysts in drafting policy proposals.

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