Baseten targets $11B after annualized revenue tripled to $600M in Q1, powered by open-source AI apps. The $1B raise signals continued capital flows into inference infrastructure, with implications for NVDA.
Alpha Score of 71 reflects strong overall profile with moderate momentum, moderate value, strong quality, weak sentiment.
The AI inference startup Baseten is negotiating a $1 billion funding round that would peg its valuation at $11 billion, more than double the $5 billion price from earlier this year. The story behind the jump is a single quarter's revenue explosion: annualized revenue reached $600 million at the end of Q1, up from $200 million at the start of the quarter, according to a source cited by The Information.
The simple read is that inference demand is accelerating as open-source model adoption widens. The better read for traders is what the round signals about capital flows into AI infrastructure, the pricing power of inference providers, and the NVDA-server demand that underpins the entire stack.
Annualized revenue at Baseten has grown 20x from March 2024 levels, the source said. That pace prompted at least one investor group to make offers valuing the company at roughly $15 billion, though Baseten appears to be settling on the $11 billion figure for the current round.
The raise size – $1 billion – is itself a bet on continued momentum. Baseten rents Nvidia AI servers to application developers and handles model training, customization, and deployment, primarily for open-source models. The company's "Inference Stack" includes flexible deployment options (cloud, hybrid, self-hosted) and enterprise-grade controls for latency, cost, and reliability.
| Metric | Q1 Start | Q1 End | Multiple |
|---|---|---|---|
| Annualized revenue | $200M | $600M | 3x |
| Implied valuation | $5B | $11B | 2.2x |
| Revenue-to-valuation ratio at end-Q1 | -- | 18.3x | -- |
The 18.3x annualized revenue multiple is elevated but not unprecedented in this corner of AI. Rival Modal recently raised at a $4.65 billion valuation (15.5x its $300 million run rate). Together AI secured a $7.5 billion valuation at 7.5x its $1 billion run rate. Baseten's premium reflects its faster growth trajectory and deeper ties to Nvidia's hardware ecosystem.
The surge in Baseten's business is directly tied to an explosion of applications built on open-source models. Unlike proprietary API providers, Baseten's customers can swap models, customize them, and control deployment. That flexibility has driven adoption among startups that six years ago would have needed convincing to care about AI infrastructure.
Modal's round exceeded its initial $2 billion target after annualized revenue jumped to $300 million. Together AI's $7.5 billion valuation followed revenue surpassing $1 billion. Both deals closed in recent months, creating a comparable set for Baseten's round.
Key insight: The inference market's growth depends on new entrants, not legacy enterprise budgets. That makes customer concentration risk low today. It also makes revenue visibility poor beyond a 12-month horizon.
Srivastava acknowledged that large enterprises face a steeper justification hurdle. “Where it's harder is justifying ROI because they're so big – and they have more to lose with the existing customer set,” he said. The dynamic means Baseten's revenue mix will likely remain skewed toward high-velocity startups for at least the next 12 to 18 months.
Baseten's growth is a bull case for Nvidia (NVDA) because every dollar of inference revenue flows through Nvidia's server hardware. The inference workload is more distributed and continuous than training, which historically has sustained longer demand cycles.
NVDA currently carries an Alpha Score of 71 (Moderate) and trades at $209.62, down 2.44% on the day. The stock's recent weakness reflects broader rotation out of mega-cap tech. The Baseten report reinforces the structural demand story: if inference providers continue raising at premium valuations, the implied capital spending on Nvidia hardware rises with each round.
The $15 billion valuation some investors floated implies roughly 25x annualized revenue. That multiple is reserved for businesses with network effects, recurring revenue, and high gross margins – none of which Baseten has proven at scale. The $11 billion figure is still rich. It leaves room for a down round if growth slows.
Baseten's largest customers are early-stage startups. If the venture capital environment tightens, those customers could cut inference spend before the company has diversified into enterprise accounts. The CEO's own characterization – "Our biggest customers five years from now don't exist today" – underscores the churn risk in the current revenue base.
A second risk is the commoditization of inference. If Modal, Together AI, or cloud hyperscalers compete aggressively on price, Baseten's 18x multiple compresses quickly. The company will need to demonstrate margin resilience or proprietary technology to defend its valuation.
For traders watching the AI infrastructure theme, Baseten's round is one more data point that capital is flowing faster into inference than into training. That favors NVDA and other hardware plays. It also creates a crowded field where only the fastest-growing providers survive the next cycle.
Check the NVDA stock page for real-time price action and the NVIDIA profile for a deeper look at the company's AI server business. For broader market context, see our stock market analysis.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.