How Do Neoclouds Expand So Quickly?

Erik Bernhardsson says neoclouds expand quickly by pre-selling chips they have not bought yet. The clearest case is Nscale, which went from nowhere to hundreds of billions of dollars in the pipeline despite barely having any capacity.

A neocloud goes to a large buyer and asks them to sign a contract for five years of chips at a good rate. It then takes the contract to Wall Street and says a big buyer committed to $10 billion worth of chips and the money is needed now. After raising the money, it goes to Supermicro, Dell, or Nvidia, gets the hardware, installs it, and delivers it to the customer. Pre-selling hardware that has not been purchased lets neoclouds scale up extremely fast.

Modal has always had more of a PLG focus and less ability to lock in long-term contracts the same way.