Nvidia and the Neocloud Gold Rush

Hands up if you’ve got a neocloud going up in your backyard! I’m joking, of course, but it almost feels like some people must be putting AI chip servers in their gardens, given the rush of people wanting to start a neocloud business. (That’s the tech world’s term for firms that rent AI servers to others.)

SoftBank on Thursday announced the creation of a U.S. neocloud venture, joining hundreds of other firms now crowding the sector. Funding still appears to be plentiful: A bunch of the younger neoclouds have raised venture funding in recent days, most recently Together AI’s $800 million fundraising unveiled on Wednesday. Meanwhile, Nvidia, which makes the dominant AI chip, is promising to financially backstop younger cloud firms in exchange for a share of their revenues, we reported on Wednesday night. Nvidia’s move raises the question of why neoclouds need a backstop if demand for computing capacity is so intense.