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Home»Business»Innovation»The Rise of Billion-Dollar Cloud Companies in the AI Boom
Innovation

The Rise of Billion-Dollar Cloud Companies in the AI Boom

News RoomBy News RoomAugust 7, 20240 ViewsNo Comments2 Mins Read
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The AI boom has led to a chip shortage, prompting the emergence of cloud startups like CoreWeave, Lambda, and Together AI, which provide computing power to companies in need. CoreWeave, founded by former commodity traders, pivoted to provide outside computing power for various uses, including AI. With the demand for Nvidia chips soaring for AI model training, companies like CoreWeave became essential in providing access to these hard-to-find GPUs. CoreWeave has experienced rapid growth, raising $12 billion in financing and expanding globally to meet the overwhelming demand for compute.

CoreWeave is at the forefront of a group of cloud companies catering to the infrastructural needs of AI builders, competing with established cloud giants like Google, Amazon, and Microsoft. The company’s success in the AI economy has landed it at number 29 on Forbes Cloud 100 list, making it the highest-ranked newcomer. Other cloud companies like Lambda are also thriving by providing massive clusters of chips to AI startups. Lambda started out by providing GPUs after realizing the need for affordable compute and has seen significant revenue growth in recent years.

The GPU supply shortage peaked in late 2023, leading to increased access to computing power with multiple players providing infrastructure for AI. Companies like CoreWeave and Lambda have formed strategic partnerships with Nvidia to provide flexible compute solutions to smaller customers. These companies offer compute on a pay-as-you-go basis, allowing AI developers to access chips for short periods without committing to long-term contracts. Cloud giants like Amazon often require clients to commit to lengthy contracts, leading to potential excess costs and wasted resources.

Kangen Water

While cloud giants cater to a broad range of industries, companies like CoreWeave and Lambda are specifically designed for AI use cases. They offer specialized environments for consuming compute, focusing on the unique needs of AI development and training. These cloud providers offer Nvidia chips at competitive hourly rates, providing AI developers with the resources they need to succeed. As AI continues to grow in importance, the demand for compute is expected to increase, driving further innovation and competition in the cloud industry.

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