WSS: Earnings season brings more evidence of stability from across ecosystem as GPU infrastructure investments and builds accelerate
The past week saw more returns from earnings season that were in line with the consistent results posted across the ecosystem. The hyperscalers (AWS, Microsoft, Meta, Google) have continued to grow steadily and even shown growth acceleration, while data centre operators (Equinix, Digital Realty, Iron Mountain, American Tower) have been dependable and consistent. Webscale cloud providers such as Akamai and Cloudflare continue to carve out non-hyperscale cloud marketshare and this part of the landscape is expanding rapidly, with GPU clouds like CoreWeave quickly taking things to a new level. We took a closer look at CoreWeave’s results in the past week and it is performing well, with aggressive triple-digit y/y growth and CapEx outlays that are looking more like those seen in the hyperscale tier. We also took a closer look at Alibaba’s results, which included details for the cloud infrastructure business. Alibaba Cloud continues to rebound and showed more growth acceleration. Meanwhile, GDS Holdings, an APAC-based member of the publicly traded data centre colocation peer group, also reported its results. GDS has been impacted by the ups and downs of the Chinese hyperscale market, but has picked up the pace on the back of momentum in Southeast Asia as it eyes broader international ambitions through its subsidiary DayOne.
Given the healthy levels of demand, it should be no surprise that CoreWeave and the wider GPU cloud space continues to build out infrastructure. CoreWeave added a third deployment with Flexential in Plano, Texas and this follows a recent launch of a new data centre location in Barcelona with MERLIN Edged. Lambda also recently confirmed it would deploy with Aligned Data Centers in Dallas. GPU-based infrastructure is going to need plenty of capacity and that is what Crusoe is trying to address in Abilene, Texas for Oracle Cloud and its AI customer OpenAI. A 200MW build is close to being energized and the JV that is supporting this project – combining Crusoe Energy, Blue Owl Capital and Primary Digital Infrastructure – confirmed it would move to an even larger build in a second phase. The plan is to build out over a gigawatt of capacity at the site through a $15b investment. And Oracle is set to acquire $40b in GPUs from NVIDIA to power the compute infrastructure supporting OpenAI.
NTT DATA’s data centre arm also shared some useful data points about its progress. This is a multi-billion dollar annual revenue business that is growing in the double-digit y/y range. It continues to bring on capacity and disclosed its land acquisition and procurement activity over the last six months. NTT GDC has picked up land in seven markets globally where it plans to significantly expand infrastructure capacity. The targeted investment through 2027 is $10b.
The sector’s healthy growth trajectory has drawn in a wide range of investors over the years and that is showing no signs of slowing down as Blue Owl Capital just raised another $7b for a new digital infrastructure fund as it looks to double down in the space. New company formation remains a solid indicator for long-term growth expectations and the past week saw Five Point Infrastructure launch a new hyperscale developer called PowerBridge, while Bain Capital launched its new data centre operating platform hscale, built on the acquisition of AQ Compute. PowerBridge is bringing in an executive team that worked together at Talen Energy’s data centre arm Cumulus Data, which sold its nuclear-powered site to AWS early last year. Elsewhere, the sector continues to see executive rotation and in the past week, we saw a new head named at Ada Infrastructure, Redcentric confirmed a new CEO and nLighten and Atlas Edge made senior executive hires.
Finally, the past week saw us publish our monthly insights, highlighting prominent sector trends. We took a closer look at new company formation, global expansion activity and the impact of global trade issues on CapEx projections. We also delved into a few interesting takeaways from earnings season. Outsourcing to cloud and colocation has shown some uptick as organizations have decided to make the move in order to take advantage of AI tools and services that are available on public cloud platforms. Another interesting development is the adoption of cloud infrastructure seen at the CDN and security providers like Akamai and Cloudflare that have more recently jumped into the cloud computing game. These are meaningful shifts in momentum taking place and they bode well for the sector’s demand profile and overall trajectory. It is also yet more evidence that the sector is doing well and an overbuild situation, and even a slowdown, is unlikely.
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