The neocloud shakeout is coming, and even the neoclouds seem to know it
Source: Fortune ·
Debt, rate hikes, and jittery lenders: why the AI cloud boom is heading for a shakeout.
From the source
Welcome to Eye on AI. Beatrice Nolan here. In today’s issue: Elon Musk puts neoclouds on notice. Anthropic’s S-1 reveals two areas where OpenAI could have the upper hand. Democrats press Anthropic on AI risks ahead of its IPO. And, are our AI agents already influencing us too much? Is the end of the neocloud nigh? Elon Musk certainly seems to think so. Neoclouds are a new and increasingly popular type of business that has exploded alongside the AI boom. The business model is simple: buy up in-demand AI chips, build or lease the data centers to house them, and rent out the computing power to AI companies. As the demand for data centers has grown, so has the number of neoclouds promising to provide them. But on Sunday, Musk had a warning for the upstarts. In an X post, he predicted that more than 200 of them could face “guppy-level death and consolidation.” There are a few reasons for this. First, as Musk points out, lenders are reluctant to finance businesses that depend wholly on AI…