Former Intel CEO Pat Gelsinger is backing a startup that thinks AI’s next bottleneck is not the accelerator. It is everything waiting for data to arrive.
Delos Data announced on September 15 that it raised more than $100 million to develop networking chips and software for increasingly heterogeneous AI data centers. Playground Global, where Gelsinger is a general partner, joined the round. Reuters reported that Delos is designing the network to work across different types of compute hardware rather than assuming every accelerator comes from NVIDIA Corporation (NASDAQ:NVDA).
That makes Advanced Micro Devices, Inc. (NASDAQ:AMD) an important read-through even though AMD is not an investor in Delos.
For illustration purposes only. Photo by Brett Sayles on Pexels
Open networking attacks the strongest part of Nvidia’s stack
Nvidia does not dominate AI simply because its GPUs are fast. NVIDIA Corporation sells a tightly integrated system of accelerators, networking, interconnects and software. That makes large clusters easier to deploy and gives customers fewer reasons to mix architectures.
Delos is betting the market becomes less uniform as inference expands. Its pitch is that a data center should be able to connect whatever mix of accelerators makes economic sense. Gelsinger described idle compute waiting for data as a major waste of both money and energy.
If that architecture works, AMD benefits indirectly. Advanced Micro Devices, Inc. has been improving Instinct accelerator performance and winning AI deployments, but every friction point involved in mixing AMD hardware with another vendor’s ecosystem protects Nvidia. Hardware-agnostic networking could lower that friction.
The counterargument is brutal: Nvidia already has scale, mature software and networking products customers know work. A startup with $100 million of financing is attacking an incumbent that spends billions on research and sells the full rack. Delos also has to prove its claimed performance improvements in commercial deployments.
Hedge funds increased exposure to both incumbents
Insider Monkey tracked 285 hedge funds holding Nvidia in Q2, up from 275 in Q1. Arrowstreet Capital raised its position 10% to roughly 34.7 million shares. AMD’s holder count climbed to 164 from 134, while Marshall Wace held approximately 3.9 million shares after increasing its stake modestly.
AMD had about 41.7 million shares sold short as of August 31, equal to roughly 2.6% of float and 2.5 days to cover.
Delos does not have to replace Nvidia networking to matter. It only has to make mixed AI clusters easier to build. Nvidia’s moat is strongest when customers buy the entire system together. Anything that makes the pieces more interchangeable gives AMD and every other accelerator challenger a slightly wider door.
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