Reflection AI, a one year-old company backed by Nvidia and Sequoia Capital, is close to a new financing that could lift its valuation to as much as $5.5B, roughly 10 times what it was worth six months ago.

The start-up, which builds artificial intelligence tools for software development, is set to raise about $1B. The Financial Times cited four people with direct knowledge of the talks.

Nvidia’s venture arm is expected to invest at least $250M, two of the people said, alongside Lightspeed Venture Partners, Sequoia and Yuri Milner’s DST Global.

People familiar with the deal said the round would value Reflection between $4.5B and $5.5B, including the fresh capital.

Reflection is targeting superintelligence, systems that can outperform humans at cognitive tasks–and has concentrated first on coding, one of the earliest uses of the technology to gain commercial traction.

Reflection was started by Misha Laskin and Ioannis Antonoglou, who earlier worked on Google’s Gemini AI model. PitchBook data show Reflection carried a $545M valuation in a funding round just six months ago.

Earlier investors include well-known tech figures such as Meta’s new chief AI officer Alexandr Wang and LinkedIn co-founder Reid Hoffman.

Private AI startups race ahead as Nvidia hits $4 trillion

Reflection’s planned raise comes amid a sharp run-up in values for AI start-ups as investors pour billions into companies seeking to turn the technology into products and revenue.

In the past week, Anthropic’s valuation rose to $170B, up from about $60B in March, after it raised $13B from groups including Iconiq Capital and Lightspeed.

Lightspeed also backs the French AI start-up Mistral, which this week was valued at roughly €10B in a new round. OpenAI, the biggest start-up in the space, is nearing a deal that would value the company at $500B.

These private groups are racing against public heavyweights such as Meta, Google and Microsoft. Earlier this year Nvidia, the leading supplier of AI chips, became the first company to reach a $4T market value, helping drive the S&P 500 to a string of record highs.

Investor sentiment has cooled in recent weeks, however, with concern over soaring AI infrastructure costs weighing on several major tech firms in late August.

Antonoglou previously worked at DeepMind, the London start-up bought by Google in 2014. Two years later, DeepMind’s AlphaGo defeated a Go grandmaster 4-1.

Reflection has said a superintelligent autonomous system “will not only help automate existing work, but also discover better ways of doing things that we hadn’t considered, similar to how AlphaGo discovered new strategies in the game of Go that expanded human knowledge”.

AI Investment Continues to Surge

Investors are pouring money into AI companies, and big tech is spending heavily to build the computers and systems that run AI.

Separately, shares of Nebius Group, an infrastructure provider focused on AI workloads, soared nearly 50% on Tuesday.

The move followed a 60% jump in late trading on Monday, coming one day after Nebius announced a multi-billion-dollar agreement with Microsoft.

The contract includes an option to expand, which could lift the total value to $19.4B if Microsoft increases capacity, giving the partners room to scale quickly as demand grows. The arrangement spans five years and has been described by analysts as one of the largest ever secured by an AI startup and among the most significant for the industry.

CoreWeave also rose 8%, lifted by the rally.

According to a Cryptopolitan report, even as U.S. employment contracted sharply in June, July and August, the Nasdaq Composite notched another record.

The two trends ran in parallel, with Wall Street leaning into the idea that softer labor data can strengthen the case for AI-linked winners. The Nasdaq gained 0.45% to a fresh all-time high, led by Nvidia, Robinhood and Broadcom.

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