Scaling compute, stacking returns

Public markets rallied slightly this week, with the S&P500/Nasdaq100 trading up 1%/1%, offsetting last week’s losses. On 5/28, a US court ruled that the Trump administration’s “Liberation Day” (4/2) tariffs were unconstitutional. In addition, on 5/27, the consumer confidence index from the Conference Board exceeded estimates and rebounded sharply from April (Source: Bloomberg). Since 4/2, the S&P500/Nasdaq100 are now +4%/+9%. Our NPM Private Market Tracker*, which shows the estimated average price performance of the 170 largest names in our internal Tape D® data, is +1% over the same period.

In this week’s Private Markets Weekly, we wanted to spotlight the AI data center industry. AI data center companies, such as Coreweave, Crusoe Energy and Lambda Labs, have been attracting interest in private markets over the past year. Coreweave went public on 3/27/25, and shares have since appreciated 190% to a $56bn equity market cap. Crusoe Energy raised capital in December ‘24 at a $2.8bn post-money valuation (Source: Pitchbook). Since that time, Crusoe has been announced as the lead developer of the first phase of the massive Stargate data center project for OpenAI and Oracle (Source: Bloomberg). Lambda Labs raised capital in January ‘25 at $2.5bn post money valuation (Source: Pitchbook).

So why now? Data center expansion is being driven in large part by the surge in demand for compute from the AI industry, which began in earnest around 2022. Growth in generative AI has increased demand for data centers and dramatically increased their size and scale. Pre-AI, a typical data center would typically have 10,000 or fewer processing chips vs. today where the large AI data centers may have >30,000 chips (Source: Bain & Co.). Elon Musk’s firm, xAI, recently opened a next generation center of ~100,000 chips near Memphis, TN. In 2023, Nvidia’s CEO predicted that over $1 trillion would be spent on data center design and construction over the coming 4 years (Source: Bloomberg).

AI data centers are a key component of the AI infrastructure. Renting GPUs (Graphics Processing Units) to clients is about more than just owning the right hardware. Providers must possess experience in – among other things – site selection, design, construction, cooling and power management. For instance, companies are increasingly looking for alternative power, including renewables and nuclear, making energy expertise a core competency. As an example, Microsoft signed an agreement with Constellation Energy to reactivate a reactor at the Three Mile Island nuclear facility in PA (Source: Bloomberg).

BIGGEST MOVERS AND TOPICAL NAMES

Based on our proprietary Tape D® data, the best performers in the private market since the 4/2 “Liberation Day” have been Anduril Industries (+32% estimated share price performance), x.AI (+45%) and Mercury Technologies (+44%).

RECENT EVENTS

• Nvidia shares rose 4% on strong earnings and sales guidance. (5/28; Bloomberg)
• GameStop announced its first purchase of $500mm worth of bitcoin. (5/28; Bloomberg)
• A third consecutive SpaceX Starship broke up on reentry. (5/27; Bloomberg)
• North Korea has been infiltrating US companies by falsely impersonating remote workers. (5/28; Bloomberg)
• xAI is paying Telegram $300mm plus 50% of subscription revenue from Telegram customers for bundling the Grok AI chatbot into the messaging app for at least a year. (5/27; StrictlyVC)

NOTABLE CAPITAL RAISES

• Neuralink has raised $600mm at a $9bn pre-money valuation. (5/27; StrictlyVC)

NOTABLE EXITS

• Stablecoin issuer Circle Internat filed for an IPO (5/27; Bloomberg)
• Salesforce.com is buying Informatica for $8bn. (5/27; Bloomberg)