British AI neocloud Nscale has agreed to acquire software startup Anyscale for $1.65 billion, marking a strategic push to capture more of its customers' AI spending by owning both the infrastructure and the software layer that manages it. Bloomberg reported the deal value, citing an anonymous source. Main Developments Nscale is paying $1.65 billion for Anyscale, a company that helps businesses scale AI workloads across data centers and servers. The acquisition brings together a neocloud that has already built business lines across energy, data centers, and orchestration software with a platform designed for workload management and scaling. Anyscale said in a statement that the combined entity can co-design the software layer and the infrastructure beneath it — something neither company could do as effectively by optimizing its layer alone. The startup will continue operating under its own branding and serving its existing customers, while its approximately 200 employees will all join Nscale. Read also: Why Commonwealth Fusion Systems Just Raised Another $1 Billion Background Anyscale was founded by the same team that built the open-source Project Ray distributed programming framework for Python. The company initially built a platform for running projects that required large amounts of computing power, but pivoted after the launch of GPT-3 in 2022 brought AI into the spotlight. It now offers scaling services for serving and training large language models, data curation, inferencing, reinforcement learning, and other tasks, with its platform built around Ray, offering developer tools, observability, and orchestration. Nscale raised $2 billion in a Series C round this March, achieving a valuation of $14.6 billion. Its investors include Nvidia, Nokia, Blue Owl, Dell, and Norwegian industrial giant Aker. The neocloud has been actively deploying that capital through compute and data center partnerships with Microsoft, British Telecom, and Nordcraft, alongside various debt raises. Why It Matters This acquisition represents a consolidation play in the AI compute market, where companies are increasingly seeking vertically integrated solutions. By owning both the physical infrastructure and the software that manages it, Nscale can potentially offer more optimized performance and capture a larger share of customer spending on AI workloads. Anyscale, which was valued at $1.38 billion in a 2022 Series C round, said its revenue increased by 70% in its most recent quarter compared to the previous sequential quarter. That growth trajectory underscores the surging demand for AI workload management tools, making the acquisition price of $1.65 billion a premium of roughly 20% over the startup's last valuation. What's Next Anyscale will continue to operate under its own branding and serve its existing customers, with its approximately 200 employees joining Nscale. The combined company will focus on integrating the software and infrastructure layers to deliver more efficient AI compute solutions, though specific integration timelines and product roadmaps have not been announced.