Nvidia Looks to Acquire Israeli AI Startup AI21 Labs

Nvidia is reportedly in advanced discussions to acquire Israeli artificial intelligence (AI) startup AI21 Labs.

The company is among the few startups in Israel working on a large-scale language model for artificial intelligence, Israeli tech publication Calcalist reported Tuesday (Dec. 30).

The report says the deal could be valued at between $2 billion and $3 billion, up from AI21’s last known valuation of $1.4 billion, reached during a fundraising round in 2023.

PYMNTS has contacted Nvidia for comment but has not yet gotten a reply.

According to the report, AI21 completed a $300 million fundraising round earlier this year led by Nvidia and Google, though it never officially confirmed the round. Estimates at the time indicated that the valuation had not climbed significantly since the 2023 funding, the report added.

The report adds that AI21 had been considered a possible acquisition target for Google, though talks with Nvidia have recently advanced to reach the company’s most senior levels.

The company’s main interest in AI21 appears to be its 200-person workforce, composed of staff with advanced academic degrees and rare expertise in AI development, the Calcalist report added.

Calcalist notes that AI21 had been struggling to keep up with the advances of major artificial intelligence players. Earlier this year, the company paused development of Wordtune, its consumer-facing AI reading and writing assistant.

A separate report from the publication says that Nvidia is planning a large expansion in Israel with a ⁠new R&D campus of up to 10,000 ​employees. Nvidia CEO Jensen Huang has described the country as the chipmaker’s “second home.”

The possible acquisition comes as a number of Big Tech companies are closing out the year with similar deals designed to push AI deeper into products, infrastructures and monetization strategies, as PYMNTS wrote Tuesday.

“Meta’s acquisition of Manus adds millions of paying users and signals a sharper focus on subscription-based consumer AI, while Google, Amazon and Microsoft are rolling out new models and platforms across edge computing, smart homes and climate data,” that report said.

Also this week, Nvidia finalized the purchase of $5 billion worth of shares in Intel as part of a larger tech partnership.

The announcement came days after the Federal Trade Commission (FTC) announced that regulators had given their go-ahead for the planned investment, seen as a major endorsement of Intel from $4 trillion Nvidia.