Cloud service provider Lambda is raising funds with a pre-investment valuation of $14.5 billion, aiming to raise up to $4 billion. This could be its last round of private financing before it plans to conduct IPO in 2027. According to The Wall Street Journal, Coatue Management and Blackstone led this round of financing.

A letter to investors reviewed by The Wall Street Journal shows that the order backlog for Lambda increased from $15 billion in June to $50 billion in September. Although this may seem like a significant increase in demand, a large portion of this growth seems to come from a company's commitment of $35 billion: Anthropic. The latter signed an agreement with Lambda at the end of August.

This means that the valuation of Lambda has risen significantly since its funding round in 2025, but it may largely depend on the ability of Anthropic to make continuous payments. Nevertheless, due to the extreme scarcity of reliable GPU computing power, investors are clearly still willing to bet on companies that provide such computing power, especially those that have signed large contracts with major AI laboratories.

For a company like neocloud, which includes Lambda, the issue is less about demand and more about the cost of meeting that demand. The expansion of data centers relies heavily on debt financing – Lambda just raised another $1 billion in debt funds last week – and lenders have become more selective when deciding to provide funding to whom and under what terms. Lambda's decision to refinance now will not only set the tone for the pricing of its IPO but also allow the company to acquire more capital before the public market takes a look.

If Lambda ultimately goes public – it was reported that the company originally planned to make its debut this year but postponed it due to market uncertainties – it will join the ranks of other neocloud companies that receive support from NVIDIA, such as CoreWeave and Nebius. These companies now rely on healthy stock prices to fund their data center expansions. The British neocloud company Nscale submitted its IPO application last month and is expected to start trading soon.

Lambda, Coatue, and Blackstone did not immediately respond to requests for comments.