Earnings, hyperscale, AI, deceleration, M&A, interconnection, multi-cloud
The sector saw a busy week as AI continues to emerge as a cloud and data centre demand driver, while there was strategic activity, more from earnings season and some noteworthy product development.
AI continues to be top of mind and tangible momentum is starting to build. Oracle disclosed a number of AI wins for the OCI platform in its recent quarterly earnings report and this was a major factor contributing to the strong performance it delivered in a tough macro environment. The demand coming from AI is pushing public clouds and data centre operators to think about how they are going to handle these workloads, which is going to take power density to another level. We share a few data points we have come across in recent weeks.
Oracle’s performance was an outlier at a time when infrastructure services has seen steady revenue deceleration. OVH also reported some slowing and we take a closer look. But while the pace of growth has slowed, there continue to be reasons why the sector still has a positive outlook despite the opinions of some. This comes from a strong foundation, built on the strength of the outsourced infrastructure model, and the continued positive trajectory of important KPIs and metrics.
Meanwhile, there was more strategic activity. Accenture has been quiet on the M&A side of things, but picked up another cloud consultancy, while Yondr secured funding from Apollo Global Management and Digital Realty continues to shuffle its portfolio and recycle capital into areas with upside and long-term growth potential.
Finally, there was some interesting product development in the hyperscale world. Google Cloud recently rolled out Cross-Cloud Interconnect in a move to becoming more cloud-neutral. The sector continues to have walled gardens that are highly restrictive, but things will increasingly move in this direction over time and Google has taken an important and potentially impactful first step.
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