Behind $500bn AI data centre plan, US startups jockey with tech giants

This week's announcement by US President Donald Trump of a massive private sector investment to build more AI data centres 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 ChatGPT creator OpenAI, SoftBank, Oracle and others will pour up to $500bn (R9.2bn) in private capital into a joint venture called Stargate, which he said will build data centres and create more than 100,000 jobs in the US. One goal of the project, said Trump, is to keep the US ahead of China in the race for supremacy in artificial intelligence.

Missing from the announcement was San Francisco-based start-up Crusoe, which was tapped by Oracle to build the first data centre for Stargate, two sources familiar with the matter told Reuters. To move more quickly and keep down capital expenditures, Oracle contracted out its development to Crusoe and engaged OpenAI in talks to be a customer, one source said.

Oracle did not respond to a request for comment. Tech news website The Information last year reported Oracle had contracted Crusoe to build a data centre 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 and Lambda — that are building cloud computing offerings specifically for the needs of AI companies. They usually accomplish this by amassing huge troves of Nvidia chips linked for specific kinds of AI work.

In Silicon Valley the firms are known as “neoclouds” because their AI focus sets them apart from cloud giants such as Microsoft, Alphabet's Google and Amazon Web Services (AWS), all of which serve general corporate customers and their own parent companies.

“This is a potential wake-up 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 centre, they think about all the extracurriculars unrelated to AI.”

Lambda has not disclosed any involvement in the Stargate project.

The neocloud companies are also routes to market for Nvidia to sell chips to developers. Microsoft, AWS and Google all offer Nvidia chips but also have their own proprietary AI chips that compete against Nvidia's chips.

Oracle and the neoclouds, by contrast, have tended to work closely with Nvidia rather than offer their own alternative chips.

“It feels like [Nvidia] 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.”

The neocloud companies may need help to move quickly. While Crusoe is building its own Abilene data centre that will hold 100,000 specialised AI chips per building when it comes online this year, many other neoclouds have turned to leasing existing space or tapping data centre construction specialists to help build their sites.

At least in the short term, many benefits may accrue to some existing data centre construction firms such as Equinix or Compass.

“The scale we're talking about has never been done before. It's a huge undertaking that will 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 centres.

“But I think it's too early to 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.

Elon Musk earlier this week raised questions about the ability of SoftBank and OpenAI to fund the project. Axios later reported a portion of the funding could be raised as debt, and The Information reported each company would put $19bn (R350bn) towards the effort.

Neocloud firms are moving fast. Crusoe was able to hand over the first building in the Abilene data centre 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 prefabricated components that speed up data centre construction, similar to how prefabricated homes reduce on-site construction time, Lochmiller said.

CoreWeave is targeting an initial public offering this year at a valuation of $35bn (R644bn), Reuters reported in November.