Surging Ai Use Accelerate Demand Neoclouds Jll

The demand for neoclouds, a new class of cloud solutions, is set to increase as the adoption of AI continues to grow at a rapid pace. A study by JLL has revealed that the growing demand for AI, combined with limited supply from traditional cloud providers, is driving the rise of neocloud infrastructure as an alternative to hyperscalers.

Neoclouds are cloud solutions that focus on providing high-performance graphics processing units (GPUs) or GPU-as-a-service (GPUaaS). Unlike traditional hyperscalers such as Amazon Web Services, Microsoft Azure, and Google Cloud, which offer wide-ranging cloud computing services for various use cases, neocloud providers offer flexible and on-demand access to GPUs that are specifically optimized for demanding AI and machine learning tasks. Some of the major neocloud providers include CoreWeave, Nebius, and Crusoe.

According to JLL, one of the major advantages of neoclouds is their ability to quickly deploy high-density GPU infrastructure compared to the multi-year build timeline common in hyperscale data centers. Andrew Batson, head of data center research for the Americas at JLL, points out that neoclouds have managed to gain an edge over traditional cloud providers by offering lower prices with more flexible terms. He further adds that as the demand for AI continues to grow, accessibility to GPU infrastructure, which neoclouds specialize in, will be crucial for its success.

JLL estimates that the global neocloud market will experience an impressive 82% compound annual growth rate between 2021 and 2025 due to increasing competition for AI capabilities and GPU resources.

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Despite the growth of neoclouds, JLL does not expect this to negatively affect hyperscalers. The firm believes that due to their specialization in AI workloads, hyperscalers will continue to be preferred by many global enterprises for their diverse range of computing services.

Moreover, neoclouds require specialized infrastructure, including high power density and advanced cooling systems, which results in higher capital requirements and shorter lease terms. This increases the investment risk for neocloud infrastructure compared to traditional data centers.

Ultimately, the success of neoclouds will depend heavily on investments, according to Mohd Syafiq, director of data center research for Asia Pacific at JLL. He emphasizes that the availability of funding will be a crucial factor in turning the potential of neoclouds into a reality capable of handling the increasing demands of AI.