Enterprise cloud computing provider Nutanix's CEO, Rajiv Ramaswami, claims that the ongoing supply chain issues have led to it becoming more economical for many enterprises to turn to cloud-based bare metal servers instead of deploying on-prem.

In an interview with The Register, Ramaswami explained that cloud providers' ability to bulk order hardware is enabling them to offer access to servers at a more attractive price than enterprises would be able to achieve by purchasing hardware and deploying it on-prem or in their data centers themselves.

This has led to customers who have historically taken an on-prem strategy to embrace cloud-based compute in order to access the hardware faster and at a better price, as hyperscalers are also getting the hardware before others due to chip companies and suppliers prioritizing major customers.

Alibaba's CEO Eddie Wu noted earlier this month that the "scale of our customer base, as well as the scale effect from all of the capex that we've put in over these years," has been an advantage in the context of the hardware shortages, a tack that has been taken by US hyperscalers as well when asked about the memory chip shortages.

Despite these beneifts, even Alibaba Cloud has seen the cost of deploying a new server doubling from just one year prior.

Ramaswami estimated, when talking to The Register, that the memory and storage price increases due to shortages will persist into the next year.

“What that means for customers is they need to plan and budget carefully,” he said. “They pick servers on price and lead time.”

On the other hand, however, Ramaswami noted that customers may favor on-prem AI infrastructure as it can help keep costs predictable.

Nutanix also posted its earnings release this week, with the company seeing its annual recurring revenue increasing 15 percent Year-on-Year (YoY) to $2.43bn. Revenue for the quarter itself was $703.1 million, up 10 percent YoY, while the company's average contract duration is at 3.4 years.

Last week, DCD attended Huawei's Innovative Data Infrastructure Forum 2026, during which a major focal point was the launch of its "full-stack data infrastructure offering for AI," which is primarily targeting enterprise customers for on-prem deployment.

DCD asked Huawei's president of the Huawei Data Storage product line, Yuan Yuan, whether the company was concerned that customers would opt for cloud-based servers instead due to price efficiencies.

Yuan argued that the company sees potential in on-prem deployments, noting: "If you are really serious about bringing AI to your enterprise, you need to think about building the AI stack on-premises, to keep your privacy, complication modulation, and to generate the unique value by yourself. You don't have to just use public AI services; you need a private stack."

Yuan later told DCD: "As the hardware manufacturer, we hold a very optimistic view of the on-premise construction. Of course, many customers need to adopt cloud services to consume AI for training services, governance services, and leverage, using public cloud services, but there are still many customers because of their regulation requirements, privacy that, for them, it's not easy to put data on the public cloud."

While Ramaswami is putting the memory chip shortage as likely to stretch out for the next year, other estimates are even longer, with manufacturers including Samsung and SK Hynix suggesting it could persist beyond 2027.