The rapid expansion of artificial intelligence (AI) is driving a significant increase in demand for neocloud services, according to JLL. The global neocloud segment is expected to grow at an 82% compound annual growth rate through 2025, as traditional data centres struggle to meet the rising demand for AI infrastructure. Neoclouds, which offer specialised access to graphics processing units (GPUs), are emerging as a crucial alternative to hyperscalers, providing faster deployment and flexible pricing for AI workloads.
Neoclouds, also known as GPU-as-a-service (GPUaaS), cater specifically to AI, blockchain, gaming, and scientific workloads. They offer tailored solutions and lower costs than traditional hyperscalers by partnering directly with hardware providers. Andrew Batson, Head of Data Centre Research, Americas, JLL, stated, “Demand for AI infrastructure is growing at an exceptional pace, and the global data centre market has become capacity constrained. Neoclouds have developed an advantage over traditional cloud providers by moving faster and pricing lower with flexible terms.”
Despite the advantages, neoclouds present higher investment risks due to their capital-intensive nature and shorter lease terms. However, they attract investors with rental premiums compared to traditional data centre tenants. Mohd Syafiq, Director of Data Centre Research, Asia Pacific, JLL, noted, “Funding will be a major factor to translate the potential of neoclouds into a reality capable of handling the AI load.”
Whilst neoclouds are gaining traction, JLL does not foresee them replacing hyperscalers. Instead, they are expected to complement the diverse computing services offered by hyperscalers, ensuring that global enterprises have access to a wide range of solutions. As AI continues to grow, the demand for specialised infrastructure like neoclouds is set to rise, presenting both opportunities and challenges for investors and service providers.
