WSS: AI-oriented infrastructure continues to push forward; sector health, growth underpins M&A activity
The past week saw more neocloud activity as capital raising and expansion activity continues to push forward at full speed. Nscale followed up its recent raise and brought in an additional $433m, while on the chip side, Cerebras Systems raised $1.1b as it continues to try to carve out a share of a market still very much dominated by NVIDIA. Meanwhile, on the strategic side, CoreWeave continues to invest in technology and is actively using M&A to accelerate its efforts. CoreWeave has now made three technology acquisitions this year and the latest deal saw it acquire UK-based Monolith AI, a developer of machine learning tools that solves physics and engineering problems. The technology will apply to various industries, aiding in workflow optimization and problem solving, but CoreWeave is going to use it to specifically target the industrial and manufacturing vertical.
The growth in AI-oriented infrastructure is being driven by uptake and usage of AI services. We have a few more data points on OpenAI’s growth, which continues to accelerate and drive its consumption of both hyperscale cloud infrastructure and data centre colocation.
While M&A has been a bit slower, there continues to be strong interest in hyperscale platforms. Last year, we saw AirTrunk get acquired for a large valuation and reporting in the media suggests Aligned Data Centers in the US, which shares certain investors with AirTrunk, could be next. And the potential valuation is reported to be pushing into the $30-40b range. The investment interest in hyperscale data centre is healthy enough that it is extending to the landscape of financial firms. Investors, lenders and asset managers are acquiring and taking stakes in firms with scale and expertise in the digital infrastructure vertical. M&A is a way to jumpstart and accelerate growth for a data centre and hyperscale practice. In recent weeks, we saw Thomas Bravo take a stake in SDC Capital Partners, a data centre and hyperscale specialist, and Future Standard acquired Post Road Group’s digital infrastructure practice.
The build-out of GPU-based infrastructure oriented to AI involves the entire ecosystem and the fibre piece is an increasingly critical one. Lumen Technologies has bet big on its network infrastructure expansion across the US, which is being built to accommodate next-generation workloads that require high levels of bandwidth and reduced latency. Lumen recently presented its portfolio and strategy at an Analyst Day that we attended, and we share some details. Lumen is well on its way to making the transition away from legacy telco to next-generation infrastructure provider.
Finally, the week saw more movement in executive circles. 365 Data Centers was the latest operator to change CEOs and elevated internal C-suite executives to new leadership positions. This follows changes at a number of operators such as Flexential and Rackspace, and hyperscalers such as Oracle.
or