WSS: Chinese hyperscaler earnings show compute surge is global; AI is the driver and providing uplift for traditional cloud
The sector hit the end of earnings season this past week as the Chinese hyperscalers reported results for the last quarter of the recent calendar year. Alibaba Cloud and Tencent Cloud’s results demonstrated some of the same trends seen from the other hyperscalers (AWS, Microsoft and Google), including top-line revenue growth acceleration, bottom-line gains from operating efficiency, strong demand profiles and positive spin-off impact from AI workloads for traditional cloud infrastructure. Oracle reports on a slightly different FY schedule and reported its latest results this past week, adding further evidence that the directional trajectory of the cloud infrastructure sector continues to move up and to the right. Earnings season also showed that compute growth is not just coming from the hyperscale category. Neocloud bellwether CoreWeave is growing at a rapid pace, and the webscale platforms (Akamai, DigitalOcean, Fastly) also showed growth acceleration and strong demand pipelines. As the sector moves into 2026, it is very clear that there is steady and consistent demand for compute infrastructure across the board. And this is flowing through the entire Internet infrastructure ecosystem.
Webscale cloud platforms continue to push forward and show that hyperscale public cloud is not a one-size-fits-all solution. Akamai reported strong results, raising its outlook for cloud infrastructure in 2026 and signing on its largest customer ever. To support that customer, Akamai recently confirmed acquisition of a large quantity of NVIDIA Blackwell GPUs that will expand its cloud infrastructure capacity significantly. DigitalOcean is another webscale platform that is scaling steadily and recently rolled out cloud infrastructure offerings built on AMD’s technology. DigitalOcean also deployed its first liquid cooling environment.
The neocloud space continues to see momentum and is busy raising capital to support infrastructure expansion in order to meet demand. Nebius secured a $2b investment from NVIDIA and upsized a multi-billion dollar private offering. It also confirmed a very large deal with Meta for GPU-based cloud infrastructure capacity. Meanwhile, Nscale confirmed that it would deploy infrastructure built on NVIDIA Vera Rubin in Europe some time next year.
Finally, there was also some M&A activity of note in the past week. RadiusDC made another acquisition of a connectivity-oriented data centre asset, picking up phoenixNAP’s carrier hotel in Phoenix, Arizona. RadiusDC, backed by Blue Owl Capital, is following the same blueprint it has put in motion in other markets such as Atlanta, Miami and Denver, acquiring established carrier hotel assets, and providing capital to upgrade and expand capacity in existing facilities and buildings to support growth. Elsewhere, there was also a transaction in the managed public cloud space. Atmosera, an MSP focused on the Microsoft platform, acquired Costa Rica-based Hikru as it looks to expand the breadth of its Microsoft practice, while strengthening coverage in the Americas. Things have been relatively quiet in managed public cloud M&A, but the growth in the sector and the increased complexity of enterprise IT environments, along with accumulating momentum towards outsourcing to take advantage of cloud and AI, are creating the conditions for renewed transaction activity. Technology-oriented deals have been happening and this is likely to accelerate moving through 2026.
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