AMD has made a strategic investment in GPU cloud provider Vultr, valuing the company at $3.5 billion.

Vultr, a startup that rents out graphics processing units and other cloud infrastructure to businesses, has raised $333 million in a transaction that values the company at $3.5 billion. AMD's venture arm and hedge fund LuminArx Capital Management led the round.

Founded in 2014 and known as a low-cost virtual server provider, Vultr offers GPUs from AMD and rival Nvidia, which are in high demand due to the boom in generative artificial intelligence. This marks the first time the company has taken equity financing, though Bank of America and JPMorgan Chase agreed to extend a $150 million credit facility for the company in 2021. AMD's central processing units are also available through Vultr, alongside Intel's.

Vultr has distinguished itself by declining to develop its own AI chip that would compete with AMD or Nvidia. "We will never seek to build GPUs and compete with that layer," Vultr CEO J.J. Kardwell told CNBC in an interview. According to Kardwell, AMD offers very good prices based on performance for the inference stage of working with AI models, which tends to be critical for organizations deploying AI at scale. Companies generally train AI models with large quantities of data and vast fleets of GPUs before moving on to the inference stage, when the models respond to or make inferences about new information.

The fresh infusion of capital will go toward international expansion, with the company currently operating 32 data center locations, mostly outside North America. Customers include Microsoft's Activision Blizzard, according to The Wall Street Journal. Vultr's current $3.5 billion valuation matches that of DigitalOcean, a competitor that went public in 2021.