Neoclouds Are Making Waves—and Cisco Is Serving to

The speedy adoption of generative AI and agentic AI is spurring demand for AI infrastructure and the necessity for a wealthy ecosystem that may ship the whole AI lifecycle. On this atmosphere, a brand new breed of AI cloud suppliers—also known as neoclouds—has emerged as agile, technically refined gamers constructing extremely specialised AI cloud providers to serve new markets and desires. At Cisco, we’re devoted to working with the total vary of ecosystem members. This contains the normal hyperscalers, in addition to these newer neocloud suppliers and foundational mannequin builders. It additionally contains communications service suppliers, colocation suppliers, and sovereign cloud suppliers that increase AI cloud providers by delivering the AI internet hosting, safe ubiquitous connectivity, and trusted infrastructure and information providers enterprises want.

The AI infrastructure market: The surging frontier

The demand for AI infrastructure is rising at an exponential price. Complete world information heart IT gear spend over the 5 years between 2025 and 2030 is anticipated to succeed in as a lot as 4.7 trillion {dollars}.¹ This encompasses servers, accelerators (XPUs), networking, optics, and storage. In the present day, it’s estimated that hyperscalers are chargeable for over 60% of this infrastructure funding, whereas neoclouds are chargeable for about 17%, which is anticipated to develop to over 30% over the subsequent ten years.² The opposite ecosystem members and enterprises themselves have gotten chargeable for an growing proportion of the AI infrastructure buildout as inferencing and agentic AI, sovereign cloud, and edge AI develop into extra mainstream. In accordance with McKinsey, demand for AI information heart capability will account for 70% of complete information heart demand by 2030 and is the principle driver of a rising infrastructure deficit.³ Neoclouds are quickly stepping as much as fill the hole and are making huge strikes to drive new enterprise fashions and expertise improvements that target the readiness, resilience, differentiation, and profitability of their AI cloud service choices.

Three approaches to AI cloud providers

Neocloud suppliers aren’t a monolith. They make the most of numerous enterprise fashions to ship AI infrastructure providers that cater to completely different use instances and verticals. Consumption fashions are altering quickly, from bare-metal choices to full-stack {hardware} and software program along with “as a service” choices. We will categorize supply and consumption fashions into a number of approaches that mirror various enterprise necessities for scalability, flexibility, value, efficiency, and information sovereignty. Particular person suppliers are selecting the approaches that finest go well with their enterprise priorities and buyer wants.

Three major approaches have emerged:

• Devoted cloud AI IaaS: On this mannequin, enterprises decide to utilizing devoted AI infrastructure inside a neocloud’s information heart for a hard and fast time period. The advantages of this strategy embody assured capability, higher efficiency isolation, and sometimes vital value financial savings in comparison with on-demand pricing. It’s finest suited to predictable and long-running AI workloads, similar to large-scale mannequin coaching or steady inference duties, and for organizations with constant AI useful resource necessities or people who want unique entry to compute assets.
• Public AI cloud providers: With this mannequin, neoclouds allow enterprise prospects to entry shared swimming pools of AI-optimized computing assets, similar to GPUs and tensor processing models (TPUs). Clients solely pay for the assets they devour with out long-term commitments. This “pay-as-you-go” strategy provides most flexibility and scalability, making it ideally suited for experimental workloads, improvement, testing, or bursty AI duties the place demand isn’t constant.
• Hybrid and edge AI IaaS: This mannequin extends deploying and managing AI infrastructure throughout a mix of public cloud environments, on-premises or colocation information facilities, and edge areas. It brings AI compute nearer to the place information is generated or consumed, addressing wants like low-latency processing, information sovereignty, and regulatory compliance. This mannequin is especially helpful for purchasers that require real-time choice making, similar to industrial web of issues (IoT), autonomous autos, or localized analytics.

Seven causes neoclouds can depend on Cisco for AI infrastructure

Whatever the service mannequin adopted, neocloud suppliers require a strong, scalable, and safe basis. Many are discovering that Cisco provides the partnering focus, complete portfolio, and imaginative and prescient essential to succeed. Listed below are seven key benefits to partnering with Cisco:

1. Complete, in-house AI infrastructure portfolio: Cisco provides the broadest homegrown AI infrastructure portfolio each inside and between information facilities. This contains built-in full-stack safe AI manufacturing unit options, AI-optimized compute, AI networking, optics, and information heart interconnect options, in addition to safety and observability for AI. Advantages for neoclouds embody architectural flexibility, streamlined procurement, constant operations and assist, and a extremely strong provide chain.
2. Architectural and operational flexibility: With Cisco, neocloud suppliers have the flexibleness to decide on the reference structure and working atmosphere that finest meets their technical necessities. Whether or not they wish to adhere to the NVIDIA Enterprise Reference Structure (ERA), the NVIDIA Cloud Companion (NCP) reference structure, Cisco Cloud Reference Structure, or just wish to construct their very own—we offer the mandatory flexibility and validated designs to speed up deployment.
3. Trade-leading AI networking materials: Cisco AI Networking delivers scalable front-end and back-end materials inside information facilities, along with information heart interconnect and scale-across networks between information facilities. Neoclouds can select between the confirmed reliability of Cisco NX-OS for operational consistency, or SONiC for open networking requirements.
4. Expanded partnership with NVIDIA: Our expanded partnership with NVIDIA allows NVIDIA Spectrum-X expertise integration on Cisco Silicon One–based mostly switches and Cisco N9100 Sequence Switches that incorporate NVIDIA Spectrum-X Ethernet change silicon—all unified below the Nexus working mannequin for seamless integration with Cisco Nexus Dashboard. Nexus is already well-known inside many neoclouds who’ve established it of their front-end computing networks.
5. Highly effective and various companion ecosystem: Cisco companions with a broad ecosystem to ship one of the best options and worth. This contains compute and accelerator companions like NVIDIA, AMD, and Intel; storage companions; software program companions; liquid cooling companions; system integrators; and lots of others.
6. Finish-to-end safety and observability: Safety and reliability are high issues for enterprises deploying AI. Cisco Safe AI Manufacturing unit with NVIDIA gives a full-stack answer with safety built-in at each layer. With Splunk, Cisco gives Observability for AI for deep visibility into each layer of the atmosphere, together with GPU infrastructure, GenAI, LLM outputs, and AI functions. Cisco provides unmatched safety and observability for AI deployments, serving to neoclouds defend their infrastructure and information.
7. Unified silicon structure with Cisco Silicon One: Cisco Silicon One is a groundbreaking switching and routing silicon structure. This single structure is the muse used throughout a broad vary of networks, from back-end and front-end AI networks to scale throughout, information heart interconnect, wide-area networks, and edge. It delivers superior congestion management and cargo balancing for AI materials and is programmable to assist rising requirements.

Constructing the way forward for AI cloud providers with Cisco

Cisco is uniquely positioned to assist neocloud suppliers’ AI infrastructure wants throughout all their service fashions. By offering cutting-edge expertise—from Cisco Silicon One and NVIDIA Spectrum-X silicon-based switching to Cisco UCS compute to built-in safety and observability stacks—Cisco allows neoclouds to ship scalable AI providers with velocity, reliability, and effectivity.

Because the market continues to evolve, Cisco gives the experience, go-to-market assist, and options to assist neoclouds speed up time to service, maximize the effectivity of GPU clusters, and in the end safe a foundational position within the burgeoning AI ecosystem.

1. The price of compute: A $7 trillion race to scale information facilities, McKinsey & Firm, April 2025. 

2. AI Infrastructure Survey, McKinsey, June 2025. (Inner Cisco survey) 

3. AI energy: Increasing information heart capability to fulfill rising demand, McKinsey & Firm, October 2024.