Rent-a-GPU neoclouds need to adapt or die • The Register

So-called neocloud companies are facing a dilemma: They need to move up the AI stack to avoid being commoditized, but they risk competing against their big hyperscale customers if they do.

Neocloud operators, or GPU-as-a-service providers, sprang up to take advantage of the huge demand for compute using GPU accelerators for AI. Many customers were forced to rent the chips because they were unable to secure their own supply.

But this business model is fragile, according to consultants McKinsey & Company , because it is inherently commoditized. There is limited differentiation in renting out access to specific hardware - typically Nvidia products - and price-driven competition can be fierce.

Investors backing neoclouds such as CoreWeave, Nebius (both publicly traded), and Crusoe (privatel