WSS: Large-scale cloud deals are moving into the webscale tier as the sector’s crosses the ecosystem
The sector had a somewhat slower week as there were public holidays in a number of countries. Earnings season has started to wind down and we take a quick look at a few of the most noteworthy themes in our monthly insight notes. It was hard to miss the revenue growth acceleration the sector is seeing and it is flowing across the board, while backlog numbers continue to accumulate amid steady demand and ongoing constraints. The sector is also seeing momentum from inferencing workloads and AI in general is creating a multiplier affect across the Internet infrastructure services value chain.
The recent earnings season also revealed ongoing shifts in the Chinese hyperscale landscape. Alibaba Cloud had a strong quarter and continues to see growth acceleration, but other hyperscale platforms coming out of China are not necessarily tracking in the same direction. Huawei Cloud reported seeing slower cloud infrastructure growth in the past year and we also noted how Tencent Cloud is just starting to push forward in cloud infrastructure. All indications are that ByteDance’s BytePlus cloud infrastructure service is showing significant progress and reporting of late confirms that it is raising its CapEx investments over last year. Tencent Cloud is doing the same with CapEx and Alibaba Cloud noted that it will likely surpass its projected three-year, $50b CapEx investment. Needless to say, these developments will be a positive for data centre colocation operators.
Elsewhere in Asia, activity is picking up pace. Australia’s NEXTDC expanded outside its home market and launched a new data centre in Malaysia and Empyrion Digital broke ground on its first data centre in the Thailand market. Southeast Asia continues to see growth and the build activity is showing meaningful acceleration across a number of national markets.
Finally, the many large-scale neocloud and AI deals continue to grab the headlines. But there is growing momentum in webscale-level deals that speaks to the comprehensive state of demand and the need for flexibility in cloud infrastructure across deployment sizes and generations of GPUs or even CPUs. Akamai recently won a large deal with Anthropic and we tracked three large-scale cloud deal won by Megaport, which had just signed its largest deal about a month prior.
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