Growing AI demand triggers neocloud solution surge

The global neocloud segment will potentially expand by a CAGR of 82% between 2021 and 2025.

Growing global appetite for artificial intelligence (AI) and limited supply via traditional providers is fuelling a surge in demand for neocloud solutions, according to a JLL report.

Neoclouds are defined as specialised cloud providers offering flexible and on-demand access to graphics processing units (GPUs) critical for AI, blockchain, gaming and scientific workloads.  

JLL analysis shows that the global neocloud segment will potentially expand by a compound annual growth rate (CAGR) of 82% between 2021 and 2025.

“Neoclouds have developed an advantage over traditional cloud providers by moving faster and pricing lower with flexible terms,” said Andrew Batson, Head of Data Centre Research, Americas, JLL.

According to JLL, a major advantage for neoclouds is their ability to quickly deploy high-density GPU infrastructure versus multi-year builds common in hyperscale data centres.

Moreover, JLL does not expect the rise of neoclouds to harm hyperscalers. Since neoclouds specialise in AI workloads, hyperscalers remain better equipped to offer the diverse computing services global enterprises prefer. 

“Investors should have a clear vision for delivering a viable business model and support from key clients before undertaking an entry into the neocloud space”, said Mohd Syafiq, Director of Data Centre Research, Asia Pacific, JLL.