AMD is set to acquire an AI software startup in its pursuit to close the gap with Nvidia.

On Tuesday, Advanced Micro Devices (AMD) made an announcement about its acquisition of Nod.AI, an open-source artificial intelligence software startup. This strategic move is intended to bolster AMD’s AI software endeavors.

Nod.AI, also known as Nod Labs, specializes in creating open-source technologies designed for future AI systems. The company’s primary focus lies in reinforcement learning, a form of AI that acquires knowledge through a process of trial and error.

This acquisition aligns with AMD’s broader “AI growth strategy,” aimed at enhancing its competitiveness, particularly against its rival chipmaker, Nvidia. Notably, Nvidia reported a remarkable year-over-year revenue increase of over 100% for the quarter ending on July 30, 2023, while AMD, during the same period, experienced an 18% revenue decline. Nevertheless, AMD managed to surpass analysts’ expectations for both sales and profits.

The acquisition of Nod.AI is expected to be finalized within this quarter, according to an AMD spokesperson interviewed by CNBC.

AMD’s spokesperson highlighted Nod.AI’s team of industry experts renowned for their significant contributions to open-source AI software and their deep expertise in AI model optimizations. This acquisition will significantly enhance AMD’s AI software capabilities.

Before founding Nod in 2013, Anush Elangovan, the CEO of the startup, was part of the initial Chromebooks team at Google and held a lead engineering role at Cisco. Harsh Menon, Nod’s co-founder and Chief Technology Officer, had previously worked at Kitty Hawk, the electric aircraft company backed by Google co-founder Larry Page, which ceased operations in 2022.

Initially, Nod Labs positioned itself as an AI hardware company, with a focus on gesture recognition and motion-tracking wearables, such as Bluetooth-connected rings for use in gaming. This technology allowed users to perform real-life hand gestures, like shooting a virtual gun in a gaming environment. Nod.AI had secured substantial funding from venture capital firms, including Menlo Ventures and Sequoia Capital, and its team included individuals with backgrounds at companies like Apple, Google, Samsung, and more.

Despite CNBC’s request for comment, Nod.AI did not provide a response