British AI neocloud Nscale is acquiring distributed computing startup Anyscale for $1.65 billion to capture more of its customers' AI spending.

The deal allows Nscale to expand beyond pure infrastructure into workload management and scaling services. Anyscale helps companies distribute AI training and inference across data centers using its platform built on the open-source Ray framework.

Why the acquisition makes strategic sense

Anyscale was founded by the team behind Project Ray, a distributed programming framework from UC Berkeley. The company initially focused on general distributed computing but pivoted to AI workloads after GPT-3's 2022 launch brought large language models into the spotlight.

The startup offers developer tools for serving and training foundation models, data curation, inference, and reinforcement learning. Its platform provides observability and orchestration capabilities that complement Nscale's hardware infrastructure.

"Together, Anyscale and Nscale can co-design the software layer and infrastructure beneath it, something that neither company could do as effectively by optimizing its layer alone," Anyscale said in a statement.

Nscale raised $2 billion in March at a $14.6 billion valuation from investors including Nvidia, Nokia, Blue Owl, Dell, and Norwegian industrial giant Aker. The neocloud has been aggressively deploying that capital through compute partnerships with Microsoft, British Telecom, and Nordcraft.

Anyscale reported 70% sequential revenue growth in its most recent quarter. The company was valued at $1.38 billion in its 2022 Series C round.

The acquisition fits Nscale's vertical integration strategy across energy, data centers, orchestration software, and now workload management. Anyscale will continue operating under its own brand and serving existing customers after the deal closes.