NVIDIA has secured a new customer for its central processing units (CPUs), with AI cloud startup Modal planning to use the company's Vera processors to run AI agents. The deal marks a step forward for NVIDIA as it looks to expand beyond graphics processing units (GPUs) and compete in a market long dominated by Intel and AMD.
Modal provides cloud computing power to developers building artificial intelligence applications. Until now, the company has relied on Intel and AMD processors for running AI-agent workloads. Its decision to add NVIDIA's Vera chips suggests the company is gaining ground in the CPU market as demand for AI computing continues to grow.
Modal said initial tests showed NVIDIA's Vera processor could handle twice as much AI-agent work as the Intel and AMD chips it currently uses. The results encouraged the startup to support NVIDIA's design, although integrating the new processors will require significant software changes.
AI agents are systems designed to carry out tasks over extended periods, rather than simply responding to individual prompts. They can help users with multi-step tasks, making performance and efficiency important for companies providing AI services.
Despite the positive test results, Modal is not planning to abandon its existing chip suppliers. Chief Executive Erik Bernhardsson said the company intends to operate a mix of NVIDIA, Intel and AMD processors.
This approach will allow Modal to select hardware based on how well it performs each task. Early comparisons included NVIDIA's Vera processor and Intel and AMD chips already on the market. Both rivals are developing newer processors, which could narrow the performance gap when they become available. Modal plans to evaluate those future chips before making further decisions about its hardware mix.
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The Modal deal comes as NVIDIA seeks to expand its presence in a processor market it estimates is worth around USD 200 billion. The company told investors it expects to generate at least USD 20 billion in revenue from Vera processor sales this fiscal year.
NVIDIA has also identified OpenAI, Anthropic and Oracle as planned users of its new chips, alongside AI startup Perplexity. Winning customers that previously relied on competing processors could help NVIDIA strengthen its market position.
Modal's own growth adds weight to the partnership. The startup recently raised USD 750 million in a funding round led by Accel, reaching a valuation of USD 15.75 billion. It expects sales to reach USD 1 billion over the coming year, while reporting that service usage has tripled and revenue has grown more than 15 times year over year.
For NVIDIA, the challenge now is turning early performance results into wider adoption. For Modal, using several chip suppliers offers flexibility as AI workloads evolve and newer processors enter the market.