A sign is posted in front of the Advanced Micro Devices headquarters on May 10, 2022 in Santa Clara, California. (PHOTO / GETTY IMAGES NORTH AMERICA / FILE / AFP)

AMD said on Tuesday it plans to buy an artificial intelligence startup called Nod.ai as part of an effort to bolster its software capabilities.

In its race to catch rival chipmaker Nvidia, Advanced Micro Devices plans to invest heavily in the critical software necessary for the company's advanced AI chips. Through more than a decade of work, Nvidia has built a powerful advantage in the AI chip market through the software it makes, and the software developer ecosystem.

AMD has vowed to invest in and build a unified collection of software to power the various chips the company makes.

"We are executing to that strategy," AMD president Victor Peng said in an interview with Reuters. "And doing it through internal investment as well as external acquisitions."

The acquisition of Nod.ai fits into the strategy because its technology enables companies to deploy AI models that are tuned for AMD's chips more easily. Nod.ai sells its technology to large data center operators, among other customers

The acquisition of Nod.ai fits into the strategy because its technology enables companies to deploy AI models that are tuned for AMD's chips more easily. Nod.ai sells its technology to large data center operators, among other customers.

READ MORE: Qualcomm, Nvidia spar for top spot in AI chip efficiency tests

AMD did not disclose the terms of the deal. The Santa Clara, California-based Nod.ai has raised roughly $36.5 million, according to PitchBook data.

Earlier this year, AMD created the AI group that will house the Nod.ai acquisition, Peng said. The group employs about 1,500 engineers - the vast majority of software related - and AMD plans to continue to expand the team with 300 additional hires this year, and more in 2024.

"We have been growing rapidly, with plans for next year as well," Vamsi Boppana, senior vice-president, Artificial Intelligence Group at AMD said.

ALSO READ: AMD unveils new AI chip, but with no big customers named

The Nod.ai acquisition is the company's second in the past few months, Peng said. When asked if the company planned to bolster its portfolio with additional acquisitions Peng said, "We're always looking."