WSS: M&A, strategic moves and more new company formation mark the transition into the new year
The first week of the year is often about picking up from the slower last month of the previous year. This year was no exception and we again saw a flurry of acquisitions and strategic moves moving into the new year. The highest profile move happened just before the holidays, with NVIDIA agreeing to what looks and feels like an acquisition or at least an acqui-hire, but was officially a licensing agreement with inferencing chip and cloud infrastructure provider Groq. Groq has had a big year and shown aggressive growth. It will now license its technology to NVIDIA as it tries to lock down the emerging market around AI inferencing. The move validates the fact there is real and meaningful separation between the infrastructure requirements around training versus inferencing. This is reported to be a $20b agreement and will see key members of the Groq team join NVIDIA.
Developing chip technology will be crucial for hyperscalers and strategic acquisition is one pathway. Back in 2015, AWS acquired Annapurna Labs in Israel to jumpstart its development of proprietary silicon and NVIDIA is doing something similar here with Groq around a specific capability. Hyperscalers are also going to be increasingly active about partnering and acquiring energy companies to secure capacity and increase knowledge around energy sourcing and innovation. Towards the end of the year, Google Cloud’s parent company Alphabet acquired Intersect, an independent producer of power. The deal gives Alphabet an energy pipeline, but also the expertise to procure more energy and develop green alternatives. Look for hyperscalers to be increasingly active acquiring energy-oriented companies this year.
There were also transactions oriented to data centre consulting capabilities. Global consultancy Accenture acquired DLB Associates to raise its game in the data centre consulting space as it continues to see enterprises consider data centre projects and face challenges around resources. Meanwhile, UK-based neocloud Nscale did something similar and acquired a data centre consulting and services company of its own called Future-tech. The deal rationale was a bit different. Accenture is looking to enhance and expand its data consulting practice, but Nscale is looking to accelerate the development of data centre self-build capabilities. Neoclouds will continue to be a good bet to use data centre colocation, but a number of rapidly scaling neoclouds are now looking to self-build in the face of high levels of demand, resource constraints and the need to offset and balance risk from working exclusively with one type of data centre deployment model.
Private equity continues to invest across the ecosystem. Element Critical received backing from new investors and existing backer Safanad, while on the IT advisory and distribution side, AVANT got more capital as well.
Strategic realignment has marked the strategic landscape over the last few years and things are ongoing. Applied Digital made the expected strategic decision to spin out its cloud infrastructure business and has a deal in place to create a new neocloud called ChronoScale. And on the data centre side, AtlasEdge sold off a portfolio of data centre assets to Templus as it focuses on larger data centre builds. Both deals are about creating the conditions for sharper focus as healthy growth levels eliminate the need to have too many product lines. It is more about doing one thing well rather than being caught doing too many things and perhaps not at optimal levels of scale and efficiency.
Speaking to the overall trajectory of the sector, new company formation continues to be a part of the strategic landscape. ClusterPower is a new operating platform in development focused on emerging markets in Europe and Goodman and CPP Investments are teaming up to target the primary FLAP markets. Beale Infrastructure is another new platform that was formed last year with backing from Blue Owl Capital. Beale recently added to its executive team and is set to develop a number of new projects in up and coming US markets.
Finally, speaking of hiring and silicon development mentioned above, Amazon revealed plans to create a new arm focused on AI models, silicon and next-generation technologies like quantum computing. Amazon has tapped company veteran Peter DeSantis to lead the new business unit. DeSantis was part of the team that developed the original EC2 compute service, while also playing an integral role in the acquisition of Annapurna Labs. AWS is looking to double down on next-generation compute and looks to be focusing on development and innovation.
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