WSS: Large-scale hyperscale and neocloud deals driving more leasing as global expansion continues
AI infrastructure was again front and centre as large-scale build-outs continued to push forward. Last week, we discussed how OpenAI had opted to not expand on the Stargate data centre campus built and operated by Crusoe in Abilene, Texas. And that there was chatter that other hyperscale platforms may jump on to contract the capacity, with credible reporting pointing to Microsoft as the tenant. In the past week, Microsoft was confirmed to be leasing capacity on the Abilene site, but on an adjacent second campus that will be supported by an on-site substation and housing close to a gigawatt of capacity. We have some of the details that have been disclosed. The development around Abilene not surprisingly raised eyebrows set off more debate about whether OpenAI was walking away because of a lack of demand, or an impending bubble in AI. But Microsoft stepping in provides further evidence that demand persists, while there are signs that we could see more momentum from hyperscalers looking and planning ahead for the next generation of chips that are coming.
There was another large-scale deal in the past week as Cipher Digital signed its third hyperscale contract with a US-based investment-grade hyperscale platform. Details were sparse, but this looks to be a 200MW deal in Ohio. Cipher Digital has signed around 600MW of capacity in two hyperscale deals since the middle of last year. Two tenants have been confirmed: Fluidstack and AWS. This third deal sounds like it could be AWS again or perhaps one of the other top hyperscalers. Fluidstack is a neocloud that has been driving leasing activity across the US and there are others like Together AI. The expansion activity is being driven by aggressive growth and there are some details that have emerged around Together AI’s trajectory as it looks to another funding round. Together AI is also consuming a significant volume of data centre colocation capacity.
The neocloud space shows no signs of slowing down. The first wave of providers are coming out of the NVIDIA infrastructure service provider ecosystem and AMD is gaining momentum as well. There are also AI platforms moving into the compute infrastructure game and fall generally under the neocloud category. France’s Mistral AI moved into the cloud infrastructure game last year and recently acquired a company called Koyeb to push this effort forward. Koyeb developed a serverless computing technology that will be a central part of the Mistral AI compute platform, while its team will help step in and build the compute infrastructure business. Mistral AI is building out significant capacity in Europe, with builds underway in France and Sweden.
As neocloud and hyperscale continues to pace the market, there is expansion activity happening in various markets around the world. India is seeing an uptick in activity and in the past week, we saw AWS push its capacity expansion activity forward, while Princeton Digital Group acquired over 200MW of resources to enable more capacity builds in Mumbai and Hyderabad. The week also saw a number of developments in Europe. Germany’s maincubes broke ground on a second campus in Berlin, while CyrusOne was the latest to break ground in Milan, Italy and Equinix is building in Dublin, Ireland. On the hyperscale side, Microsoft opened its first cloud infrastructure region in Denmark.
Finally, we summarized the recent month’s most noteworthy trends in the past week. We have touched on a number of those developments above around large-scale AI and hyperscale deals, neocloud activity, Stargate and M&A. The developments are a good snapshot of where demand continues to be and the recently concluded earnings season provides further validation.
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