.NEXT 2026 - AI factories and neo-clouds open new opportunities for Nutanix

Neo-clouds and the build-up of AI Factories are golden opportunities for Nutanix, the firm’s senior leadership team said at this week’s .Next annual conference in Chicago, USA. Both concepts will increase the demand for infrastructure and compute management for CIOs and AI providers, according to Nutanix CEO Rajiv Ramaswami and Debojyoti Dutta, Nutanix Chief AI Officer.

Ramaswami says a new breed of service provider is emerging. Neo-cloud providers such as Nscale, Runpod, Genesis Cloud, Vast, and Lambda provide digital leaders with a GPU-focused service. As these companies become ever more important to CIOs tasked with AI-based innovation, they will need the technologies of Nutanix, the CEO claims, adding Nutanix has built a team focused on new service providers:

There are a lot of service providers out there that are looking for a partner, and we are investing in our stack to provide the capabilities that they need. This is a relatively new area for us.

Digital leaders are adopting AI and, in a competition for a finite amount of AI technology. There is a shortage of GPUs. CIOs in our community are moving to datacenters best suited to the needs of their organization, seeing data center capacity squeezed, and hardware costs increasing. Dutta adds:

The hyperscalers are optimized for large-scale general compute, and they are also trying to get to this new type of accelerated computing. In the meantime, the time to market has created a new entry point for a new class of vendor to give you that accelerated computing.

The pace of change and chance of disruption continues to increase; the hyperscalers looked impregnable in the years following the pandemic and are now being challenged. Like the history of gold rushes, those that make spades are often the winners, and not the prospectors. Nutanix believes its focus on infrastructure technologies and the management of infrastructure makes it, yet again, a winner. Dutto adds:

Enterprises really need a multi-cloud strategy for this; it is driven by sovereignty, a lack of power, a lack of cooling, and a lack of GPUs, so there are multi-dimensional shortages.

These challenges are driving digital leaders to consider and build an AI factory. Dutto says:

You need an AI factory, as otherwise you can’t produce tokens fast enough at a cheap enough price point. For us, we have several thousand employees and engineers wanting to write code, and they are extremely excited and embracing AI. So the demand has gone through the roof, and I am seeing exponential demand for tokens.

With technologies like Open Claw, you can generate six to seven million tokens as an engineer is writing an agent. Then multiply that by six to seven thousand employees, and the demand is exponential.

This demand means organizations that really want to adopt AI at pace and scale will need a factory. An AI factory provides digital leaders with the security of a vertically integrated business model. As AI is still new, like any new market, the early business pioneers often find they have to have a vertically integrated business model, as there just isn’t enough of a supply chain to meet their needs. As the market matures, the need for a vertically integrated business model decreases.

Initial AI use cases are rather simple at present, according to Ramaswami, but as organizations learn and embrace AI, they will make more complex demands, and create the need for an AI factory. He adds that many see an AI factory as niche at present, but he is seeing demand grow.

Infrastructure

In addition to GPU, power, and cooling shortages, many organizations are discovering that their infrastructure is not able to support the demands of AI. Dutto adds:

Plumbing is becoming more and more important. AI apps are the interior design, and plumbing is the infrastructure.

As digital leaders look to balance an estate that includes cloud, on-premise, and neocloud providers, as well as an increasing number of AI agents, Nutanix believes its platform tools are ideally placed. As diginomica reported, in his keynote Ramaswami talked of platforms for the applications of today and tomorrow. In addition, the event has seen Nutanix announce a slew of partnerships with providers like NetApp, the CEO says:

The ecosystem we are building continues to grow…these are big partners, and it is a sign of vitality in the ecosystem.

This will have a positive impact on the business, Ramaswami says. He predicts revenue and annual recurring revenue (ARR) will increase. He adds:

We are providing our customers with a lot more choice and flexibility out of the box.

Both leaders believe demands for data sovereignty will play a key role in the demand for Neocloud and an AI Factory. Ramaswami said:

Data sovereignty is here to stay. It is about the data, but also running your own infrastructure with your own people and reducing risks.

My take

There is no surprise that Nutanix believes its platforms and heritage in managing complex estates makes them a contender to be an AI winner. But its customers are extremely loyal, and as we see in our community, the platform delivers business benefits and cost reductions. So their confidence may be well placed. The rise of neo-clouds and AI factories will be an area to watch, though I wonder if demand for these will only come from businesses and verticals where the AI competition and impact are highest.