Just before the holiday break, I participated in an advisory session on the current state of the neocloud market, which is continuing to experience significant growth as the demand for AI infrastructure continues unabated. Can it continue?
Here I’m sharing some of the notes I used for that discussion.
Current Environment
The neocloud market’s trajectory through 2025 defies conventional infrastructure adoption patterns:
2025 industry-wide performance:
- Q2 2025 revenues exceeded $5 billion, representing 205% year-over-year growth
- Full-year 2025 revenues expected to surpass $23 billion
- GPU-as-a-Service and generative AI platform services growing ~165% annually
- Five-year CAGR (2021-2025) reached 82%, showing sustained momentum beyond initial hype
Long-term projections:
- Market expanding from ~$16 billion (2024) to ~$1.1 trillion (2034)
- Projected 52.6% CAGR over the next decade
- Synergy Research estimates $180 billion in annual revenues by 2030
- Inference workloads expected to accelerate faster than training workloads through 2030
Hyperscaler validation:
- Microsoft committed ~$60 billion in aggregate GPU leasing across multiple neocloud providers
- Nebius secured multi-billion-dollar capacity agreements with Microsoft and Meta
- CoreWeave’s $14.2 billion commitment to Meta demonstrates strategic rather than temporary relationships
| Date | Parties Involved | Deal / Commitment | Value / Scale | Key Details |
| Oct 2, 2025 | Nebius & Microsoft | Multi-year AI infrastructure capacity agreement | Up to ~$19.4 B | Microsoft secures access to ~100,000 NVIDIA GB300 GPUs via Nebius to expand AI compute capacity; part of Microsoft’s broader $33 B+ of neocloud commitments across vendors including CoreWeave, Nscale, Lambda. |
| Nov 11, 2025 | Nebius & Meta | Multi-year AI infrastructure supply deal | ~$3 B | Nebius agrees to provide Meta with AI compute capacity over ~5 years, marking Nebius’s second major hyperscaler contract. |
| Sep 2025 | CoreWeave & Meta | Long-term cloud compute agreement | ~$14.2 B | CoreWeave commits to supply GPU-based compute to Meta for AI workloads; rises stock and underscores neocloud demand. |
| Oct 2, 2025† | Microsoft & multiple neoclouds | Combined capacity agreements | ~$33 B total | Microsoft’s reported total commitments to neocloud capacity providers (including Nebius, CoreWeave, Nscale, Lambda). |
Signs of Market Maturation
Broader enterprise adoption:
- Customer base expanding beyond AI-native organizations and research labs
- Traditional enterprises launching production AI initiatives evaluating neocloud options
- Heightened expectations for enterprise support, compliance certifications, and IT integration
Multi-cloud infrastructure strategies:
- Enterprises adopting hybrid architectures (rather than wholesale migration)
- Hyperscalers for application hosting and managed services
- Neoclouds for GPU-intensive compute workloads
- Pattern mirrors historical infrastructure evolution with specialized providers (CDNs, managed databases)
Intensifying competition:
- Market remains fragmented with diverse business models competing
- Pure-play GPU providers, AI platform companies, and data center operators
- Consolidation pressures loom as capital requirements escalate
- Near-term demand sufficient to support multiple viable competitors
- Cost advantages vary significantly based on workload characteristics and team capabilities
CoreWeave Tracker
| Date | Event / News | Summary |
| Sep 15, 2025 | Expanded OpenAI capacity agreement | CoreWeave expanded its data center capacity supply deal with OpenAI, increasing the agreement’s potential value up to ~$22.4 B to support next-gen AI training and deployment. |
| Sep 30, 2025 | $14.2 B deal with Meta | CoreWeave announced a multi-year, ~$14.2 B AI infrastructure contract with Meta, significantly boosting its business and reinforcing its role in the AI compute ecosystem. |
| Oct 30, 2025 | Core Scientific merger rejected | Proposed $9B acquisition of Core Scientific was rejected by Core Scientific shareholders. |
| Nov 10–Nov Nov 2025 | Q3 2025 earnings & guidance pullback | CoreWeave reported strong Q3 revenue beats, but lowered full-year guidance due to data center build-out delays. |
| Nov / Dec 2025 | Convertible debt offering | CoreWeave announced a $2 B convertible senior notes offering (later upsized to $2.25 B due to strong investor demand) to fund expansion. |
Nebus Tracker
| Date | Event / News | Summary |
| Sep 8, 2025 | Major Microsoft AI infrastructure deal | Nebius announced a multi-year, ~$17.4 B–$19.4 B contract with Microsoft to deliver dedicated AI infrastructure capacity. |
| Nov 11, 2025 | $3 B Meta AI infrastructure contract | Nebius signed a $3 billion, five-year AI infrastructure agreement with Meta. |
| Nov Q3 2025 | Revenue growth & earnings results | Nebius reported ~355 % year-over-year revenue growth (e.g., ~$146 M in Q3) but also widened net losses and heavy capex as it expands capacity, especially tied to large hyperscaler contracts. |
| Dec 3, 2025 | Strategic expansion commentary | Nebius outlined plans to leverage its Microsoft and Meta contracts to broaden its client base beyond hyperscalers, pursue higher-margin services, and target ~2.5 GW of contracted power by end of 2026. |
| Dec 5, 2025 | Company internal update & platform developments | Nebius published a November digest noting the new Meta deal, ongoing data center expansion, and ecosystem integrations (e.g., MLPerf results and broader platform enhancements). |
Neocloud Capacity (MW)
| Provider | Approx Known/Planned Capacity | Accelerators | Notes |
| CoreWeave | ~590 MW active / ~2.9 GW contracted pipeline | NVIDIA-only (H100, Blackwell, L40S, etc.) | CoreWeave has publicly shared active power footprint and a large, contracted pipeline tied to hyperscaler and enterprise deals. |
| Nebius | ~220 MW (2025 target) / ~2.5 GW target by end-of-2026 | NVIDIA-focused | Nebius has publicly stated a ~220 MW footprint by end of 2025, with aggressive expansion toward multi-GW. |
| Lambda | ~320 MW leased | NVIDIA-focused | Lambda’s leased capacity footprint is known; broader multi-GW long-term ambitions exist. |
| Crusoe Cloud | 200+ MW energized (initial) | Primarily NVIDIA | Crusoe’s Abilene site and planned future builds suggest several hundred MW of capacity as of late 2025. |
| Vultr | ~50 MW planned (Ohio cluster) | Mixed NVIDIA & AMD offerings | Vultr announced a 50 MW cluster in Springfield, Ohio, its new AI data center powered by AMD Instinct MI355X GPUs (expected online early 2026). |
NVIDIA Neocloud Investments
| Neocloud Provider | NVIDIA Involvement | Notes |
| CoreWeave | Equity investment & strategic support | NVIDIA owns ~24.3 M shares (~7% of CoreWeave), worth roughly $3.9 B; also entered agreements to buy unsold capacity. |
| Lambda | Equity investment | NVIDIA owns ~1.2 M shares (value ~$65–$134 M depending on share performance). |
| Nebius | Private investment (small stake) | NVIDIA has invested in Lambda as part of broader support for neocloud partners, and Lambda is listed among NVIDIA-backed cloud partners. |
| Nscale | Strong GPU partnerships (but details vary) | NVIDIA provided ~$500 M in backing to help Nscale build AI datacenter infrastructure in the UK and Europe. |
