Three Gripes Driving Enterprises from Hyperscalers to Neocloud Providers

Hyperscalers’ dominance in the cloud computing market is increasingly challenged by neocloud companies. Neocloud solutions target far more specific AI workloads than hyperscalers, including regional compliance and verticals. Neocloud providers also have more straightforward pricing models, support cloud flexibility, and take a more tailored approach to solution development. Using ABI Research’s The Future of Cloud Infrastructure: The Impact of Neocloud Providers on the Compute Value Chain report, this Research Highlight identifies three major pain points that enterprises have with hyperscalers and explains how neocloud providers have an advantage.

Key Takeaways:

• Rising cloud costs and vendor lock-in are driving enterprises toward neoclouds. Clear, predictable pricing and flexible service terms make neocloud providers more appealing than hyperscalers that rely on opaque billing and restrictive ecosystems.
• Data sovereignty and compliance are shaping cloud strategy. Neocloud companies are gaining traction by offering localized infrastructure that satisfies regional regulations and ensures full control over where enterprise data reside.
• Tailored cloud solutions are winning over generic platforms. Unlike hyperscalers’ one-size-fits-all model, neocloud providers deliver specialized Graphics Processing Unit (GPU)-based architectures and Artificial Intelligence (AI)-ready environments that align with specific workloads, industries, and regional requirements.

Neoclouds—companies that support specialized, niche cloud computing solutions—are giving hyperscalers a run for their money. Their GPU-as-a-Service (GPUaaS) offerings support data-intensive AI workloads, are better at complying with regional regulations, and are cost-effective.

This isn’t to say hyperscalers are going anywhere; Amazon Web Services (AWS), Microsoft Azure, and Google Cloud accounted for 63% of global cloud spending in 2Q 2025, and adoption has grown 25% year-over-year. However, neoclouds are a compelling partner for enterprises seeking more control, transparency, flexibility, and cloud sovereignty.

Hyperscalers are not ignoring this fact. Some are partnering up with neocloud providers, enabling them to address the pain points that enterprises have. A notable case is Nebius embedding AI infrastructure into Microsoft’s hyperscaler stacks.

ABI Research Principal Analyst Leo Gergs recently published the report, The Future of Cloud Infrastructure: The Impact of Neocloud Providers on the Compute Value Chain. In it, he notes that “neoclouds are reshaping the compute value chain by embedding within hyperscaler ecosystems, while enabling enterprises with sovereign, AI-ready infrastructure.” He continues, “Their dual role is redefining strategic dynamics across demand, supply, and infrastructure, with lasting implications for every layer of the chain.”

The ascending neocloud market offers opportunities for several players across the computing supply chain:

• Silicon Vendors
  • Manufacture AI-ready, energy-efficient, and secure chipsets
  • Diversify sales beyond hyperscalers
• Server Original Equipment Manufacturers (OEMs)
  • Develop modular and sovereign-certified servers
  • Generate recurring mid-sized contracts across regions
  • Partnerships with telcos and integrators
• Colocation & Data Center Operators
  • Growing need for localized
  • Sovereign-compliant capacity
  • Increased demand for inference compute

The remainder of this post looks at three major frustrations pulling enterprises from hyperscalers and toward neocloud providers.

Global GPUaaS revenue from neocloud companies is forecast to increase from US$24 billion in 2024 to more than US$65 billion by 2030, translating to a Compound Annual Growth Rate (CAGR) of 17%. (Source: ABI Research)

1. The Cost of Cloud-Lock-Ins Is Too High

The Gripe with Hyperscalers

The first pain point that enterprises have with hyperscalers is opaque and unpredictable pricing models. Customers are fed up with paying high data egress fees, with some organizations paying US$3,500 to US$7,000 to transfer 50 Terabytes (TB) of data between cloud environments. Combined with high switching costs and dependence on proprietary services, enterprises are looking for a viable alternative cloud partner.

Where Neoclouds Have an Advantage

Neocloud companies use more customer-friendly business models than hyperscalers. Companies like Civo and Lambda present clear billing structures, assuring customers they know what they are signing up for. Moreover, neoclouds offer competitive flat-rate pricing and usage-based pricing models optimized for specific AI training and inferencing workloads. Bottom line, enterprises are increasingly avoiding vendor lock-in because it can be expensive and it hinders the ability to move cloud resources around.

2. Compliance Pressure and Sovereignty Demands Are Growing

The Gripe with Hyperscalers

Enterprises that operate in heavily regulated industries, such as finance, healthcare, and government, prioritize data locality and jurisdiction control. For example, the U.S. CLOUD Act introduces legal conflicts with the European Union’s (EU) General Data Protection Regulation (GDPR). U.S.-based hyperscalers offer limited assurance that AI workloads and data are truly aligned with local data sovereignty regulations. Enterprises want to avoid these risks at all costs.

According to Gergs, “On the market and regulatory side, enterprises demand compliance with evolving data sovereignty rules, while shifts in AI workloads risk underutilized infrastructure if neoclouds cannot adapt quickly.”

Where Neoclouds Have an Advantage

Neocloud companies have distributed geographic footprints, which enable them to cater to specific jurisdictions. Partnerships such as Vultr and Digital Realty and Lambda and Aligned Data Centers exemplify how neocloud collaboration with local data center operators is driving sovereign cloud deployments. The growing pressure on enterprises to adhere to regional security regulations positions neoclouds’ ability to guarantee in-country data residency and local compliance in a positive light.

3. A One-Size-Fits-All Approach Doesn’t Work for Everyone

The Gripe with Hyperscalers

Hyperscalers’ cloud platforms are robust and built for scale, but they lack the specificity of neocloud solutions. Hyperscalers often revolve around a generalized deployment model. Enterprise customers seek cloud solutions that are tailored to their unique strategic requirements, whether that’s a data sovereignty law or a low-latency application.

Where Neoclouds Have an Advantage

In contrast to hyperscalers’ one-size-fits-all approach, neocloud providers build cloud computing solutions with AI/GPU workloads and regional nuances in mind. For example, healthcare data modeling or financial risk simulation use cases can be locally tailored. This ensures that sensitive data do not leave the country and regional compliance is supported. A key propositional value of neocloud solutions is specialization.

Get the Full Assessment

The reader is reminded that neocloud providers are not without their own set of obstacles. As noted in our report, hyperscalers possess preferential treatment when it comes to GPU access. In turn, this creates pricing and procurement risks for neoclouds. Moreover, profitability can be challenging to achieve when neoclouds compete over low pricing models.

For a comprehensive analyst study of how neocloud companies are influencing the cloud infrastructure industry, download ABI Research’s report, The Future of Cloud Infrastructure: The Impact of Neocloud Providers on the Compute Value Chain.

Companies mentioned in the report: Civo, CoreWeave, Crusoe Cloud, Lambda, Nebius, Vultr,