Nvidia is in advanced discussions to acquire Israeli artificial intelligence (AI) start-up AI21 Labs in a deal that could be worth as much as $3bn, according to a report by financial daily Calcalist, citing sources.

The report said AI21 has been available for acquisition for an extended period and had also attracted interest from Google.

In recent weeks, however, talks with Nvidia have reportedly accelerated and moved to the most senior levels.

Nvidia’s interest is said to be centred largely on AI21’s staff.

The company employs around 200 people, many with advanced academic qualifications and specialised experience in artificial intelligence development. 

Calcalist described the potential transaction as a shortcut for Nvidia to expand its AI workforce in Israel, putting the implied cost at roughly $10m–$15m per employee.

If completed, the deal would be structured as an acquihire, meaning the purchase would be primarily aimed at bringing in personnel rather than acquiring technology, according to the report.

The acquisition would be Nvidia’s fourth major deal in Israel and its second largest after Mellanox.

In 2023, Nvidia acquired Deci and Run:ai for a combined $1bn.

AI21 was founded in 2017 by professor Amnon Shashua, professor Yoav Shoham and Uri Goshen.

Shoham and Goshen serve as co-CEOs, while Shashua is chairman.

A funding round in 2023 valued AI21 at $1.4bn, according to Reuters, with Nvidia and Alphabet’s Google participating.

However, the Calcalist report said the company has struggled over the past two years to keep pace with leading AI firms. In April last year it stopped developing its long-running Wordtune product line, described as an AI-based writing and reading tool used for rewriting and generating text.

AI21 has since shifted its focus towards specialised language models aimed at corporate clients, rather than mass-market products such as ChatGPT, Gemini or Cloud.

The company is targeting customers where the consequences of mistakes are higher and dependable, verified information is a priority.

Its enterprise product is called Maestro and is intended to lift the accuracy of language models by 50%, according to the report.

In recent months, AI21 has also introduced a reasoning model it says is faster and more advanced than rival offerings, while using less memory.

Despite these developments, estimates cited in the report put AI21’s revenue at around $50m, far below competitors that are already generating billions of dollars.

Separately, Nvidia is planning an expansion in Israel, including a new R&D campus in Kiryat Tivon, south of Haifa, intended to support up to 10,000 employees.

Nvidia has said the campus would include up to 160,000m² of office space, parks and shared areas across 22 acres, modelled on its Santa Clara, California, headquarters.

Construction is expected to begin in 2027, with initial occupancy planned for 2031.