However, the sustainability of this growth is uncertain. The expansion of these alternative cloud providers depends on their ability to continue offering GPUs at competitively low prices. As traditional cloud providers increase their investments in custom hardware, competing on pricing could become more difficult. Additionally, while many generative AI workloads run best on GPUs, not all workloads require them. There is also a risk that the generative AI bubble could burst, leaving these providers with surplus GPUs and insufficient demand.
Key takeaways:
- Alternative cloud providers like CoreWeave and Lambda Labs are raising significant funding due to the growing demand for generative AI, which requires GPUs for training and running models.
- Alternative cloud providers can often offer cheaper rates for GPU usage compared to incumbent providers like AWS, Google Cloud, and Microsoft Azure.
- Despite the current growth, the sustainability of these alternative cloud providers is uncertain. Their success will depend on their ability to continue offering GPUs at competitive prices and the continued demand for generative AI.
- Incumbent providers are investing in custom hardware to run and train models, which could pose a challenge to alternative providers that rely on Nvidia GPUs.