eoclouds just keep winning.
On Tuesday, AI cloud company Lambda announced a $1.5 billion Series G funding round led by TWG Global. The deal comes just weeks after Lambda reached a “multibillion-dollar” agreement with Microsoft to deploy tens of thousands of Nvidia GPUs.
“Lambda sits at the intersection of AI’s explosive growth and the infrastructure gap,” TWG’s Thomas Tull told The Wall Street Journal.
Lambda’s funding marks another milestone for neocloud providers as the AI boom drives up demand for AI-specific hardware. According to Synergy Research Group, neocloud revenues are projected to exceed $23 billion this year.
- CoreWeave has signed deal after deal with companies like Meta, OpenAI and Nvidia after going public in March.
- In October, Nscale announced an IPO and a partnership with Microsoft worth $14 billion, just two weeks after announcing two funding rounds within days of each other.
- Nebius scored a $19.4 billion partnership with Microsoft in September and a $3 billion deal with Meta last week.
- And Lambda in September scored a deal with Nvidia worth $1.5 billion to lease back its GPUs from the startup.
Though these deals might look like trouble for conventional cloud hyperscalers like Amazon, Microsoft and Google, the landscape more likely resembles “co-opetition” rather than sheer rivalry, Trevor Morgan, chief operating officer of OpenDrives, told The Deep View.
“I speculate they're in a ‘watch and wait’ period while they try to maintain their current business in what's kind of an uncertain economic climate,” said Trevor.
So what happens to these neoclouds amid a market retraction? That’s going to depend on how much these neoclouds are relying on a “pure AI play,” and whether they have enough substance to withstand turbulence, said Morgan, and which is the most balanced, realistic and diversified as far as customers and growth trajectories.
“Even if a bubble bursts, that doesn't mean that that's bad for a player who strikes that balance perfectly well,” said Morgan. “Hopefully they're planning for that.”