WSS: Energy company disclosures provide clues and context for data centres and hyperscale
It takes us the better part of a month (and often longer) to comb through the results of all of the relevant Internet infrastructure companies that report during earnings season. While the number of publicly listed companies on the data centre side has shrunk, we have started to actively track the results coming out of the energy sector as these companies are now disclosing important data points that provide useful colour and context to the current state of supply and demand. This past week, we took a look at Dominion Energy’s report and they shared some eye-opening data points about the pace of energy consumption coming from hyperscale data centres. On the cloud side, we look at Rackspace’s sluggish earnings and in APAC, GDS reported some heavy leasing activity, driven by demand from hyperscalers that are deploying literally hundreds of MWs in Southeast Asia – namely, Johor. And in real estate, Goodman disclosed more details about its footprint and pipeline. The earnings universe has definitely expanded and we are also tracking the likes of Meta for clues about CapEx consumption and NVIDIA for GPU consumption.
Subscribers will know that we recently published an M&A report that covers the last 18 months. It has been one of the slower stretches we have seen in M&A over the last 10-15 years. Things have been starting to pick up and we tracked a number of transactions in the data centre space that have been confirmed in the past month. Just this past week, we saw Yondr Group secure an investment from Mubadala in the UAE. Mubadala now has investments in three hyperscale operators, with stakes also in Aligned Data Centers and Princeton Digital Group. During this period of slower M&A activity, it was hard to miss how the hyperscalers had stopped making strategic acquisitions, particularly around enabling technology. There are now signs that the reins are being loosened and Amazon acquired chip developer Perceive Corporation from Xperi as it tries to replicate what it did with the 2015 acquisition of Annapurna Labs. Annapurna’s technology eventually powered the Graviton instance portfolio and Amazon is looking to use Perceive’s technology to build another generation of chips that are oriented to inferencing workloads.
Strategic activity is now also about reallocating capital resources in a market where the cost of building data centres continues to rise and the numbers keep climbing with hyperscale growth pushing forward and starting to accelerate. Publicly listed operators like Digital Realty have brought in partners to invest in its stabilized assets and funnel capital to expansion projects and healthier growth areas with more upside. In the past week, it is being reported that Brookfield is looking to do the same within its portfolio, looking for investors in some of Data4’s stabilized data centres.
At the end of every month, we identify some of the important recurring themes impacting the sector. We looked at how earnings season showed more signs of sector stability, the quickening pace of enterprise cloud evaluations and outsourcing, along with new data centre strategy assessments from webscale cloud infrastructure providers. We also tracked how densification in data centre colocation environments continues to accelerate.
Finally, there were more developments around the GPU cloud space. Lambda partnered with SK Telecom in South Korea to deploy infrastructure in Seoul and this is another sign that GPU clouds are looking to push into global markets sooner than later. To this point, GPU cloud providers have been mostly confined within US borders. The rise of GPU cloud has, of course, driven up consumption of data centre colocation capacity. CoreWeave has been one of the biggest consumers and has expanded its uptake with Core Scientific twice in just a few months time. It recently expanded its senior management team again and this included a new senior position with capacity planning squarely in the remit. Needless to say, CoreWeave is looking to build more advanced internal capabilities around capacity planning, operations and infrastructure deployment.
On another side note … this weekly summary is going to become a bit more comprehensive and will also be published on the Substack platform as we look to evaluate other publishing platforms for our subscriber base. And if you have not yet heard, we are hosting an executive summit in Las Vegas on September 25-26. The infra / STRUCTURE summit is in its fifth year now and gaining momentum. There is a distinct possibility that we cap registrations soon so please be sure to register at www.infrastructuresummit.io.
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