Nexthop AI has raised $500 million in a Series B led by Lightspeed Venture Partners, with Andreessen Horowitz joining existing backers Altimeter Capital and Kleiner Perkins.
The round values the Santa Clara-based company at $4.2 billion, less than a year after it emerged from stealth with $110 million in March 2025.
Alongside the fundraise, the company unveiled three new networking switches designed specifically for AI data center traffic.
The raise arrives as hyperscalers pour capital into AI infrastructure at a pace that legacy networking equipment was not built to handle.
Alphabet, Amazon, Meta, and Microsoft are expected to spend roughly $650 billion on AI data centers and related infrastructure in 2026 alone.
What Nexthop Is Building
Nexthop develops networking hardware and software that manages data flow between thousands of GPU servers, both within data center facilities and across them.
The company co-designs its systems alongside each hyperscaler's own engineering teams rather than selling off-the-shelf products.
Its switches support speeds of 1.6 terabits per port, with dense configurations offering 50-100+ terabits of aggregate throughput - performance levels previously found only in large telecom core routers.
The software stack is built around open-source network operating systems such as SONiC, giving hyperscalers the flexibility to integrate Nexthop's hardware into their existing environments.
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The Market Opportunity - and the Competition
Nexthop is targeting a data center switching market estimated at $35 billion, competing against Cisco Systems, Arista Networks, and Hewlett-Packard Enterprise.
The incumbent argument for Nexthop is that those vendors built their products for the cloud era, not for the sustained, all-to-all communication patterns of large GPU training clusters.
The company was founded in 2024 by Anshul Sadana, who spent 17 years at Arista - including as its chief operating officer - and eight years prior at Cisco. Sadana said that by partnering with Nexthop, hyperscalers can compress their product development cycles by six to twelve months and explore four to six technology alternatives instead of the one or two they would typically attempt on their own.
Whether the company can convert that positioning into durable revenue against established vendors with existing customer relationships remains the central test of the thesis - and the $500M is the runway to find out.
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