Databricks seeks US$130 billion valuation: report

[HONG KONG] Databricks is in talks to raise funds at a valuation north of US$130 billion, the Information reported, underscoring persistent interest in the providers of AI tools despite growing warnings of an industry bubble.

The US startup aims to put the new capital towards hiring and acquisitions, though it has not signed a term sheet with investment firms, the outlet reported, citing a source involved in the talks. If a deal goes through, it would mark a 30 per cent surge in valuation for the San Francisco firm since a September financing co-led by Silicon Valley names from Andreessen Horowitz to Insight Partners.

Any negotiations coincide with concerns about the trajectory of an industry that’s setting aside potentially trillions on data centres and development, without yet a mainstream application or established route to profits.

This week, news surfaced that Peter Thiel’s hedge fund Thiel Macro sold its stake in Nvidia Corp. during the third quarter – yet another retreat from investments in the chipmaker at the heart of the post-ChatGPT AI development boom. SoftBank Group disclosed its exit from Nvidia just last week.

Hedge fund manager Michael Burry has emerged as perhaps the highest-profile critic, disclosing bearish wagers against both Nvidia and software developer Palantir Technologies. A series of circular, multibillion-dollar deals between AI chipmakers, startups, data centre operators and others across the tech ecosystem have further stoked concerns this year that the industry is propping itself up.

Yet investors continue to vie for a slice of startups from the US to Japan, seeking to make early bets on potential future industry leaders.

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San Francisco-based Databricks is one of the larger players in the area of cloud and data software – an industry dominated by more established firms such as Oracle and Snowflake. The startup helps clients analyse and build artificial intelligence apps with complicated data from a variety of sources. Databricks has said that it’s targeting the newer arena of transactional databases, which store and process information produced by ongoing business operations.

The startup’s software runs on top of other cloud platforms, such as Microsoft’s Azure and Amazon.com’s AWS. As Databricks has expanded, it’s begun to more directly compete with companies including Snowflake and cloud infrastructure vendors such as Microsoft. BLOOMBERG