WSS: Neocloud earnings show growth acceleration, while crypto to colo segment gains more momentum as publicly listed company universe continues to expand
The sector continues to move at a rapid pace, with overall infrastructure growth accelerating and aggressive expansion activity playing out globally to support expectations and projections of a growth cadence that does not show signs of slowing down. The results coming out of earning season confirm these dynamics. Last week, we saw the growth acceleration coming from hyperscale cloud (AWS, Microsoft Azure, Google Cloud, Oracle Cloud), and in the past week we look at the neocloud tier, which includes the likes of CoreWeave, along with DigitalOcean, Cloudflare, Akamai and others. This segment also saw similar dynamics, with growth acceleration driven by inferencing growth, AI service uptake and the ongoing migration from legacy systems to off-premise outsourced infrastructure. The neoclouds and webscale providers (we are consolidating them into one segment now) are consuming significant volumes of data centre colocation capacity and we have data points from the likes of DigitalOcean, CoreWeave and Akamai.
Earnings season now involves a number of listed companies that were either adjacent or even outside the sector not that long ago. But as the sector evolves, and demand continues to push the needle, the ecosystem is deepening. Cloud storage provider Backblaze is helping neoclouds with storage and recently signed a large deal with CoreWeave that is going to drive its growth, which will be driven increasingly by cloud computing infrastructure. We look at its 2Q26 results, while also delving into the emerging crypto turned colo sector. The likes of CoreWeave are driving a ton of leasing and the results are now being recognized. Some like Applied Digital are further along than others, and we took a closer look this past week at results coming from TeraWulf and Galaxy Digital.
The sector is going to be an increasingly bigger part of the public markets. During the last several years, the data centre colocation sector went through a privatization wave, essentially leaving only two publicly listed operators in the US (bellwethers Equinix and Digital Realty). Given investor enthusiasm and interest, sector maturity and wider understanding of the long-term nature of these businesses, there is unverified chatter that the likes of CyrusOne, Switch and Vantage Data Centers are at a minimum, considering public filings. The former two companies were previously listed, but part of the recent privatization wave. They could be back sooner than later. Csquare also recently joined the public markets.
The neocloud space saw more activity as providers innovate and build out infrastructure to meet strong demand levels. Together AI recently raised $800m and Mistral AI in France expanded its partnership with Microsoft. Microsoft will not just deploy Mistral AI models on its cloud infrastructure platform, but run Azure on Mistral’s cloud infrastructure. Meanwhile, in other strategic developments, Nscale acquired Anyscale as it looks to add more capabilities for AI application development. Neocloud providers continue to weigh acquiring or partnering to bring in technology that enhances the overall value proposition beyond the raw underlying infrastructure. The availability of value-add technology on top of raw infrastructure is not just a differentiator, but a key driver of margin improvements that were apparent in the results of neoclouds and hyperscalers. The uptake also has a flywheel effect that is driving more migrations to traditional cloud infrastructure, and pushing the upside built into all existing customers.
Finally, the week also saw a number of developments come out of APAC. Microsoft opened another cloud infrastructure region in Hyderabad, India, STT GDC recently revealed expansions plans for its campus in Jakarta, and TrueIDC is set to expand further in Bangkok.
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