NxtGen Cloud Technologies, a prominent data center and cloud services provider, has unveiled ambitious plans to invest $400 million in expanding its artificial intelligence (AI) infrastructure through the deployment of 12,000 Graphics Processing Units (GPUs) by May 2025. This significant investment comes as demand for AI computing continues to surge across India, positioning NxtGen to become a key player in the country’s growing AI ecosystem. The Bengaluru-headquartered company is currently engaged with potential investors to secure the necessary funding for this large-scale expansion of its GPU fleet.

NxtGen Cloud Technologies currently operates with a fleet of over 1,000 GPUs, including high-performance models like Nvidia L40S and H100. According to A.S. Rajgopal, CEO and Managing Director of NxtGen, the company has already initiated this investment process and is actively engaging with new investors to collaborate on this ambitious expansion. “This investment has started, and we’re talking to new investors to collaborate,” Rajgopal told BW Businessworld.

The company has outlined a clear acquisition strategy for the first 4,000 GPUs but is still in the evaluation phase for subsequent procurement stages. Notably, NxtGen plans to incorporate the latest cutting-edge hardware, including Nvidia’s newest H200 and B200 GPUs, to significantly enhance its AI infrastructure capabilities. This phased approach allows the company to adjust its procurement strategy based on technological advancements and market demands.

The investment aligns with the exponential growth trajectory of generative AI (GenAI), with Morgan Stanley projecting global spending on AI hardware, networking, and memory to nearly triple from $98 billion in 2024 to $276 billion by 2028. Research also suggests that generative AI revenue could surpass $1.1 trillion during this period, compared to just $45 billion in 2024, indicating a substantial market opportunity.

NxtGen Cloud Technologies is strategically positioning itself as a crucial contributor to India’s national AI program, the IndiaAI Mission. The company has been confirmed as one of the key providers of GPU computing power for this national initiative, underscoring its growing importance in India’s AI landscape.

For its participation in the IndiaAI bid, NxtGen has committed 1,088 GPUs from a diverse range of providers, with 55% of its total bid offering consisting of Nvidia’s GPUs, 43% AMD’s GPUs, and 2% Intel’s GPUs. Rajgopal elaborated: “We have made the INDIAai bid with three hardware platforms – AMD (MI325X, MI210), Nvidia (L40S, H100, H200) and Intel Gaudi-2”. This multi-vendor approach enables a broad spectrum of computing options to meet various AI workload requirements, with a commitment to deploy a minimum of 256 AMD MI325X and 256 Nvidia H200 GPUs per quarter.

A key component of NxtGen’s expansion strategy is its strategic partnerships with technology providers. In December 2024, the company signed a $27 million contract with Akash Systems for the provision of Diamond Cooled servers. This partnership aims to position NxtGen as “the world’s most energy-efficient AI compute solutions provider” by leveraging NVIDIA and AMD GPUs with Akash Systems’ groundbreaking Diamond Cooling technology.

Diamond Cooling offers thermal conductivity that exceeds copper by five times, enabling more efficient heat dissipation from power-intensive AI workloads. Rajgopal highlighted the transformative potential: “We are collaborating with Akash to set an industry benchmark for sustainable AI. Through a combination of Akash’s Diamond Cooling, waterless liquid cooling, and advanced GPUs from Nvidia and AMD, we are able to double the performance per watt, reducing the cost of AI compute services by over 50%.”

Beyond hardware investments, NxtGen is significantly expanding its human capital. The company plans to hire 400 AI engineers, with approximately 80% based in Bengaluru. Recruitment efforts have already begun through campus placements at institutions like MIT-WPU in Pune. Currently, NxtGen employs over 400 staff members, including more than 80 AI engineers, highlighting its anticipation of accelerated growth in AI workloads.

NxtGen operates five major data centers across India (Bengaluru, Faridabad, Ahmedabad, and Mumbai). With the ongoing GPU deployment, the Bengaluru facility is expected to reach full capacity by May 2025, prompting considerations for constructing new data centers. “We are looking at building a new data center to newer specifications,” noted Rajgopal, as the company collaborates with Nvidia on a long-term design roadmap.

NxtGen’s $400 million investment comes amid a global surge in AI infrastructure spending. Leveraging a GPU-plus-services business model, the company is poised to address both the immediate training needs for AI models and the long-term enterprise adoption of AI technologies. Rajgopal emphasized that the first batch of 67 IndiaAI applicants alone would require over 18,000 GPUs, underscoring the massive scale of India’s AI ambitions. He added, “People want to build a large language model (LLM) because having an Indian model becomes foundational for most AI use cases.”

Although initial demand is expected to be high for AI training, Rajgopal anticipates a shift toward enterprise adoption in subsequent years, with enterprise use cases eventually dominating GPU consumption.

Looking ahead, NxtGen faces significant capital requirements to fully realize its AI infrastructure vision. Rajgopal indicated that the company will need “a few billion dollars” over the next two to three years. Funding challenges are compounded by the Indian funding landscape, where obtaining debt for IT businesses is difficult. To address this, NxtGen is exploring private debt structuring and engaging with potential major investors. Although an IPO was initially planned for 2027, this timeline may be revisited based on investor interest and market conditions.

NxtGen Cloud Technologies’ $400 million investment in GPU infrastructure represents a significant commitment to advancing India’s AI capabilities. By expanding its GPU fleet to 12,000 units, implementing innovative cooling technologies, and building specialized AI expertise, NxtGen is positioning itself as a key enabler of AI adoption across Indian enterprises and research institutions. This investment reflects a strategic vision to support both the immediate needs of AI model training and the long-term enterprise adoption of AI technologies. As demand for AI computing continues to grow exponentially, NxtGen’s expanded infrastructure will play a crucial role in democratizing access to high-performance computing resources and accelerating AI innovation throughout India.