Firming Up the Neocloud Market & DC Beneficiaries

Research evidence excerpt

Firming Up the Neocloud Market & DC Beneficiaries

highly lucrative, given the short NextDC SharonAI S3, S4, S5, S6, M2, M3, M4,

payback periods of ~2.5 years and IRRs north of 20% for major compute deals. GPU and CDC (Infratil) Firmus andMostinsites,edgeexceptsites for

CPU chips can still be used after 6 years, as customer use cases don't always require the Brooklyn and HU1

latest generation chips. Feedback from meetings with NVDA suggests that strong demand DGT Latitude SYD1, iSeek

for AI is likely to continue beyond 2028, given that we are still in the early innings of Agentic .Source:MAQ CompanyResetDatadata, Jefferies IC3SW

and Physical AI. Potential downsides include a decline in chip rental prices, commoditisation,

supply constraints, and counterparty risks. Figure 4 - Bloomberg Neocloud Rental Indexes

$6.00

The rise of neoclouds is positive for AU data centres. Given that US power capacity is $5.00

extremely tight, Australia is a suitable alternative location where hyperscalers and neoclouds $4.00

can still secure power. Both offshore and Australian neoclouds could allocate more capacity $3.00

locally by leasing from the likes of NXT and CDC. Local data centre operators are able to $2.00

diversify their customer base with the inclusion of the neoclouds and Tier-2 hyperscalers, no $1.00$0.00

longer relying on a few hyperscalers. In addition, frontier models have openly stated that they Feb-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24 Jul-24 Jul-24 Aug-24 Sep-24 Oct-24 Nov-24 Nov-24 Dec-24 Jan-25 Feb-25 Mar-25 Apr-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25 Aug-25 Sep-25 Oct-25 Nov-25 45999 46024 46049 46074 46099 46124 46149 46174

are looking to Australia to host their AI workloads, as evidenced by recent press reports that .