WSS: More new company formation and vendor production levels signal growth trajectory of sector
Capital raising and new data centre operating company formation continues to take place across the landscape, driven by strong levels of demand that point to significant long-term upside and opportunity. Last week, we saw the entry of QII, led by former QTS CEO Chad Williams, while a number of former executives from Talen Energy’s data centre arm Cumulus have come together to build a new operating platform called PowerBridge that is making steady progress on a hyperscale campus in west Texas. It makes perfect sense that many of the new operating platforms are headed by industry veterans with long track records operating data centres and handling hyperscale customers. Many of these companies have brought in former hyperscale employees and one of the biggest names in hyperscale – former AWS CEO Adam Selipsky – will lead newly formed Helix Digital Infrastructure with the help of KKR and other investors. The common thread among many of the new entrants is the shift in operating model away from pureplay hyperscale colocation. New entrants are much more involved on the pre-development and energized land side of the game. Starting here at the resource aggregation and procurement stage provides the foundation for the main calling card around flexibility and optionality these new platforms are building.
The vendor ecosystem that supports data centre development also provides good indicators for the sector’s overall health. The likes of Meta and NVIDIA have been supporting Corning to help it increase production of connectivity equipment, and in the past week, Amazon got into the act as well, pledging billions. And there was more innovation in data centre design that has implications for data centre development and cloud operations. NVIDIA is obviously a critical vendor in the ecosystem and is working with various hardware partners to provide a blueprint for data centre developers and neoclouds to build AI-oriented infrastructure. The NVIDIA DSX platform is being used by NAVER in South Korea and it will build out an initial deployment, based on this design, of 55MW. Meanwhile, AWS has been working on how it architects its network and has come up with a new design that is significantly more efficient. The improvements will flow through to the bottom-line and shows how scale effects can continue to kick in for hyperscale platforms.
The APAC region continues to see momentum. In the past week, we tracked a number of developments in Indonesia, with SM+ Data Centers topping off its build in Jakarta, BDx Data Centers banking more energy for its Jakarta-area footprint, and Digital Edge also hitting its topping off milestone at the CGK campus outside Jakarta. In other APAC developments, Digital Realty entered the market in Malaysia, with an eye on the interconnection-oriented enterprise market, and on the cloud infrastructure side, Alibaba Cloud opened a cloud infrastructure region in Johor and Akamai reached the $1b ARR mark for APAC and promoted internally for a new regional leader.
Picking up on the demand for AI-oriented infrastructure, the past week also saw more capital raising activity from neoclouds. TensorWave raised $350m in a Series B round and media reports indicate Mistral AI in France is looking at raising €3b. We will have a few more details next week on Groq, which is reportedly closing in on raising up to $650m as it looks to pivot more in the direction of direct infrastructure service delivery, effectively placing it into the neocloud game. Needless to say, the capital is set to flow through the data centre and cloud infrastructure ecosystem.
Finally, the week saw more data centre operators raise capital for growth and expansion initiatives. Switch increased its debt facility to $9.5b, Yondr did some refinancing to support its portfolio in both North America and Europe, and in terms of projects, Data4 is investing €5b in France.
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