Hyperscale, earnings, AI, GPUs, Nevada, colocation separation, financing, M&A
Another busy week saw the start of earnings season, hyperscale data centre developments, movement in AI and capital raises and investments aimed at building out more infrastructure in strategic markets.
The hyperscalers kicked off earnings season and we saw Google, Microsoft and AWS report. The results were varied, but the deceleration that has marked the sector’s performance over the last year or so is getting closer to reaching a bottom. Signs of stabilization are emerging, but it will be a relatively slow recovery.
There is a variable that could quicken the recovery. AI has helped the sector stabilize and is going to be a big part of the sector’s future and perhaps that will happen sooner than later. AI is pushing CapEx investments from the hyperscalers and independent providers like CoreWeave and Lambda Labs are gaining momentum. Word on the street is that Lambda Labs is closing in on a significant capital raise. Meanwhile, hyperscalers are reconsidering how they build for a future driven by AI. Meta took the lead on this and halted its builds last year to redesign and evaluate how it builds data centres and is only now restarting, but importantly, with a new plan for AI in place.
The combination of hyperscale growth and AI adoption is sure to mean more demand for infrastructure. And the requirements continue to get bigger. As a result, the data centre business is starting to separate again, with real estate, power and permitting becoming a business in and of itself. New operators like Tract are focused on this end of the business and selling directly to hyperscalers and wholesale data centre operators. Tract just announced a new project in Reno, Nevada that will put this vision into play.
The demand for infrastructure requires more capital and operators continue to be busy. Data4 secured a new debt facility, Ascenty closed new financing and Microsoft is set to invest over $3b in its Australian footprint.
Finally, there were some strategic developments of note. Dell’s Virtustream is in the process of being realigned, while there was some M&A activity in the European mass-market cloud space.
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