Donald Trump’s announcement of a massive private sector investment to build more artificial intelligence (AI) data centers puts the spotlight on a relatively small, agile class of cloud computing companies that are positioned to play a most important role in the technology sector.
On Tuesday, the US president said that OpenAI, creator of ChatGPT, along with SoftBank, Oracle and other companies, will invest up to $500 billion in private capital in a joint project, which he says will build data centers and create more than 100,000 jobs in the United States.
One of the goals of the project, Trump said, is to keep the United States ahead of China in the global race for supremacy in artificial intelligence.
However, no mention was made in the announcement of San Francisco-based startup Crusoe, which was selected by Oracle to build the Stargate project’s first data center, two sources familiar with the matter told Reuters.
To move faster and keep capital expenditures low, Oracle outsourced development to Crusoe and then entered into talks with OpenAI about becoming a customer, one of the sources said.
Oracle did not respond to a request for comment. Tech news website The Information reported last year that Oracle had hired Crusoe to build a data center in Abilene, Texas, for OpenAI.
Read: Trump announces a joint venture in artificial intelligence for 500 million dollars
Crusoe is part of a group of newer companies – which, according to chip research firm SemiAnalysis, also includes CoreWeave, Nebius Group and Lambda – that are developing cloud computing offerings specifically for the needs of AI companies. . These companies are amassing huge quantities of Nvidia chips linked to specific AI jobs.
In Silicon Valley, these firms are known as “neoclouds” because their focus on AI distinguishes them from cloud giants like Microsoft, Alphabet’s Google Cloud, and Amazon Web Services (AWS), which serve both general corporate customers and their own. parent companies.
“This is a potential wake-up call that smaller companies can move faster,” said Robert Brooks IV, vice president of revenue at Lambda, referring to the Stargate plan.
“When AWS and (Google Cloud Platform) build a data center, they think about all these extracurricular things that are not related to AI,” he added.
Lambda has not revealed any involvement in the Stargate project.
Neocloud companies are also avenues to market for Nvidia to sell chips to developers. Microsoft, AWS, and Google all offer Nvidia chips, but they also have their own proprietary AI chips that compete with Nvidia’s.
By contrast, Oracle and the neocloud companies have tended to work closely with Nvidia rather than offering their own alternative chips.
“It looks like (Nvidia) has another big buyer,” said Stacy Rasgon, a Bernstein analyst who follows the semiconductor industry. “These are not players that seem to be building their own chips right now.”
Move the earth to move fast
To be sure, neocloud companies themselves may need help to act quickly. While Crusoe is building its own data center in Abilene, which will house 100,000 specialized AI chips per building when it comes online this year, many of the other neoclouds have turned to leasing existing space or hiring data center construction specialists to Help them build their sites.
At least in the short term it is possible that some existing data center construction companies, such as Equinix or Compass, will reap many benefits.
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“The scale we’re talking about here has never been done before, so it’s a huge undertaking that will absolutely create a ton of jobs and great things like that,” said Jason Hardy, chief technology officer for AI at Hitachi Vantara, which provides storage systems for data centers.
“But I think it’s too early to know exactly how all of this will play out, other than the fact that this is not a hyperscaler,” Hardy added, referring to traditional cloud computing companies.
Additionally, Elon Musk raised questions earlier this week about SoftBank and OpenAI’s ability to fund the project. Axios later reported that some of the financing could be raised as debt, and technology publication The Information reported that each company would contribute $19 billion to the project.
But neocloud companies are advancing rapidly. Crusoe was able to deliver the first building at the Abilene data center for tenant improvements within six months, something that normally would have taken several years, Crusoe CEO Chase Lochmiller told Reuters earlier this month .
Crusoe is developing prefabricated components that speed up the construction of data centers, similar to how prefabricated homes reduce on-site construction time, Lochmiller explained.
CoreWeave, another neocloud company, is targeting an initial public offering this year at a valuation of $35 billion, Reuters reported in November.
With information from Reuters
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