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Neocloud firms like Crusoe and CoreWeave focus on

AI-specific

cloud solutions

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Oracle collaborates with Crusoe for Stargate data center

development

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Neoclouds work closely with Nvidia ( NVDA ), unlike traditional

cloud

giants

By Stephen Nellis, Anna Tong

SAN FRANCISCO, Jan 23 (Reuters) - - This week's

announcement by President Donald Trump of a massive

private-sector investment to build more AI data centers casts a

spotlight on a relatively small and nimble class of cloud

computing firms positioned to play a bigger role in the tech

sector.

On Tuesday, Trump said that ChatGPT creator OpenAI, SoftBank

, Oracle and others will pour up to $500

billion in private capital into a joint venture called Stargate,

which he said will build data centers and create more than

100,000 jobs in the United States. One goal of the project, said

Trump, is to keep the U.S. ahead of China in the global race for

supremacy in artificial intelligence.

Missing from the announcement was San Francisco-based

startup Crusoe, which was tapped by Oracle to build the first

data center for Stargate, two sources familiar with the matter

told Reuters. In order to move more quickly and keep capital

expenditures down, Oracle contracted out its development to

Crusoe and then engaged OpenAI in talks to be a customer, one

source said.

Oracle did not return a request for comment. Tech news

website The Information last year reported that Oracle had

contracted Crusoe to build a data center in Abilene, Texas, for

OpenAI.

Crusoe is among a crop of newer companies - which according

to chip research firm SemiAnalysis also includes CoreWeave,

Nebius Group ( NBIS ) and Lambda - that are building cloud

computing offerings specifically for the needs of AI companies.

They accomplish this usually by amassing huge troves of Nvidia ( NVDA )

chips linked for specific kinds of AI work.

In Silicon Valley, these firms are known as "neoclouds"

because their AI focus sets them apart from such cloud giants as

Microsoft ( MSFT ) , Alphabet's Google and Amazon

Web Services, all of which serve both general corporate

customers and their own parent companies.

"This is a potential wakeup 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 the data center, they think about all

these extracurriculars unrelated to AI." Lambda has not

disclosed any involvement in the Stargate project.

The neocloud companies are also routes to market for Nvidia ( NVDA )

to sell chips to developers. Microsoft ( MSFT ), AWS and Google all offer

Nvidia ( NVDA ) chips but also have their own proprietary AI chips that

compete against Nvidia's ( NVDA ) chips.

Oracle and the neoclouds, by contrast, have tended to work

closely with Nvidia ( NVDA ) rather than offer their own alternative

chips.

"It feels like (Nvidia ( NVDA )) got another big purchaser," said

Stacy Rasgon, an analyst at Bernstein who follows the

semiconductor industry. "These are not players that look like

they're building their own chips at this point."

MOVING DIRT TO MOVE FAST

To be sure, the neocloud companies themselves may need help

moving fast. While Crusoe is building its own Abilene data

center that will hold 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 tapping data center

construction specialists to help build their sites.

At least in the short term, many benefits may accrue to some

existing data center construction firms such as Equinix ( EQIX )

or Compass.

"The scale that we're talking about here has never been done

before, so it's a huge undertaking that will absolutely create a

bunch 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 actually tell what this will all flesh out to, other

than the fact that this isn't a hyperscaler," Hardy said,

referring to incumbent cloud computing firms.

Moreover, Elon Musk earlier this week raised questions about the

ability of SoftBank and OpenAI to fund the project. Axios later

reported that a portion of the funding could be raised as debt,

and tech publication The Information reported that each company

would put $19 billion toward the effort.

But neocloud firms are moving fast. Crusoe was able to hand

over the first building in the Abilene data center for tenant

improvements within six months - something that would have

normally taken several years, Crusoe CEO Chase Lochmiller told

Reuters earlier this month.

Crusoe is developing pre-fabricated components that speed up

data center construction, similar to how pre-fabricated homes

reduce on-site construction time, Lochmiller said.

CoreWeave, another neocloud company, is targeting an initial

public offering this year at a valuation of $35 billion, Reuters

reported in November.