WSS: Earnings seasons showing more growth acceleration, while leasing and expansion continues against backdrop of armed conflict in Middle East
The past few weeks have seen a number of companies from across the ecosystem report earnings. Last week, we looked at Cloudflare, Fastly and Akamai, and and within this peer group there is also DigitalOcean. DigitalOcean had a strong quarter and also demonstrated growth acceleration that has been increasingly commonplace across the sector. While acceleration is a prominent theme, there are different growth stories happening in the sector right now. Rackspace is a mainstay in the infrastructure space, but has been experiencing revenue attrition over the last several years as it continues to make the transition from legacy services to next-generation offerings. There were some positive signs coming out of the recent quarter as Rackspace looks to go after the AI-oriented addressable market with a more DevOps and engineering-oriented approach. With AI emerging, there are also highly positive growth stories driven by new technology adoption. CoreWeave is at the centre of the GPU-oriented cloud infrastructure market and reported its results, which showed more triple-digit growth rates. While it did not necessarily accelerate its rate of growth, CoreWeave was able to hit enviable levels of scale in its short history, reaching $5b in ARR in 2025.
CoreWeave is one of several former cryptocurrency companies that have shifted to the data centre and cloud infrastructure market. But to this point, it is one of the only ones focused on cloud infrastructure delivery. The rest of the companies making the move to digital infrastructure have focused on data centre colocation, taking advantage of land and energy assets and expertise to address demand from hyperscale cloud platforms and other large-load end users. The latest to join in this was Riot Platforms, which signed a deal with AMD for up to 200MW of capacity. AMD is looking to get its wares to market through a developing service provider channel, and this capacity it has procured looks to be part of that strategy.
While GPUs and neoclouds continue to be a healthy growth segment, hyperscale cloud and enterprise remain steady growth engines. And there continues to be meaningful leasing activity. NTT GDC disclosed a number of large enterprise deals in multiple US markets, and this followed a number of hyperscale deals disclosed late last year.
Elsewhere, the strategic landscape has been picking up pace and there was more activity in the past week. Data centre bellwethers Equinix and Digital Realty used M&A to enter and double down in emerging European markets. Equinix acquired atNorth to expand its footprint in the Nordics, while Digital Realty entered Bulgaria through the acquisition of Telepoint and also acquired an asset in Portugal. Both Equinix and Digital Realty acquired assets with interconnection-rich capabilities, while Equinix also picked up hyperscale-level capacity through atNorth’s portfolio spanning the Nordics.
Geopolitics is a top of mind these days and unfortunately, armed conflict can be a byproduct. The conflict in the Middle East is starting to cause regional instability. Data centres have not traditionally been thought of as military targets, but that may be because there has not been significant armed conflict in places where the Internet is mature over the last three decades. That may have suddenly changed and AWS data centre facilities in the UAE and Bahrain were apparently targeted by drone attacks and the incidents caused significant downtime. The perpetrators may have decided that cloud infrastructure and data centres were critical enough infrastructure to merit attack. AWS has advised its customers to implement DR plans and move to cloud infrastructure regions in other locations. This may be a watershed moment for data centres. Data centres may need to be more prepared for these kinds of contingencies in the future.
Finally, the week saw a number of developments coming out of Europe. On top of the Equinix and Digital Realty acquisitions, EdgeConneX planned its first data centre in Sweden, atNorth acquired land and is planning development in Sweden and Finland, while Ada Infrastructure is building in London. Meanwhile, Chinese hyperscalers are also expanding in Europe, with Tencent Cloud adding another AZ in Germany.
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