What is NeoCloud?

Jonathan Thomas on the circular AI capex financing risk.

“Take that example times a thousand and everybody's lending andor equity investing in everyone else's projects and the concern is when the music stops all these people go for the chairs and a lot of people going to be left without a chair because some of those funding commitments are going to vanish as though they were a vapor.”

Jonathan Thomas explains how NeoCloud companies create a circular AI financing loop, with Nvidia financially backstopping GPU purchases by firms whose backing capital may itself be contingent or sourced indirectly from Nvidia.

“I start a Neocloud. I say I am building a data center. I have money from Saudi Arabia and maybe the Norwegians and everybody private equity Apollo's in blah. So, I'm gonna build this data center and I'm going to start my own NeoCloud. Jensen Wang calls and says, "I heard the news. I think it's great. We would like to sell you GPUs." Y and by the way, we will financially backs stop those purchases. You don't have the capital yet. We know you're good for it because we see that you have all this backing and therefore Nvidia is going to book that chip sale to me and I'm either using money that indirectly comes from them or I'm backstopping that to raise money from someone else.”

Neocloud firms report the spot market for compute has completely vanished as of the time of reporting.

“At the time of my trip, I'm told that the spot market has completely vanished.”

Neocloud firms predict the compute shortage will persist for at least one to two more years with high confidence.

“These Neocloud firms believe that the comput shortage will not let up for at least one to two years. In this tenant, they have complete certainty.”