O wning is cheaper than renting , whether it’s the house you live in or the giant blocks of hardware you run your software business on. That’s the billion-dollar bet Steve Tuck and Bryan Cantrill made back in 2019 when they cofounded Oxide.

Today, their Emeryville, California-based startup is building rack-style hardware and software systems that companies can install in their own data centers instead of renting cloud computing infrastructure from hyperscalers like Amazon, Google and Microsoft.

At the time, it was a contrarian move. Businesses were going in the opposite direction, moving their data and systems to the public cloud, where cloud giants like AWS and Azure sell access to computing resources over the internet. (Under this setup, multiple companies share the same hardware but data is kept separate.) The global public cloud market was an eye-popping $240 billion market in 2019, according to research firm Gartner . That number climbed to $720 billion last year. Today, about 50% of the world’s business data sits in the public cloud, according to a recent survey. Spending on private cloud infrastructure in comparison was just $20 billion in 2019 and about $60 billion in 2025, according to IDC.

Nevertheless, hardware veterans Tuck and Cantrill were convinced that enterprises would want to continue running some parts of their business on hardware they owned. “The economics of the public cloud are not sustainable in the long-term and at scale,” cofounder and CTO Cantrill, 52, tells Forbes .

That idea resonates even more today. In an era where companies are building and running more software than ever thanks to AI, they need reliable, secure and consistent access to computing power. Oxide aims to help firms manage rising cloud costs, get unrestricted access to compute during a global supply shortage and gain more control over sensitive data they don’t want to send to outside the boundaries of their businesses.

The startup is seeing an uptick in demand in part due to the “compute supercycle of AI,” CEO Tuck says. It ships 200,000 of its servers every month, up from 10,000 a year ago. Oxide is profitable with revenue in the hundreds of millions, up from single digit millions 12 months ago, according to a person familiar with the company. (Oxide declined to share exact revenue numbers.) The company lists Idaho National Laboratory, rocket company Stoke Space and quant trading firm Jump trading among its customers. Clients in heavily regulated industries like defense and finance love that Oxide gives them additional security and control, Tuck says. Tuck claims an AI frontier lab is among its customers but declined to share details.

On Friday, the company announced it raised $445 million in Series D funding at a $6 billion valuation. Eclipse Capital, a VC firm backing physical industries startups, led the round with participation from Atreides Management and AMD Ventures as well as existing investors including Jane Street.

Tuck claims a defense tech company was able to bring its costs down by over 70% using Oxide’s systems. Running a workload on Oxide racks in its own data centers cost 6 cents an hour, a fraction of the 26 cents AWS charges to use its servers.

While it might be cheaper and more secure to run your own servers in data centers, it’s challenging to get it all up and running. Traditionally, companies that build their own data centers have to work with dozens of different vendors to piece together their infrastructure across circuit boards, networking and data storage. “The end result is kind of a Frankenstein amalgamation of on-premises infrastructure that didn’t really make any of your internal stakeholders happy,” seed investor and Eclipse partner Seth Winterroth says.

Oxide’s real value-add is building a system that brings fragmented parts of hardware and software all in one place. “Prior to Oxide the only option was having to build a five layer cake… that was cumbersome, inefficient, and took a lot of manual intervention to run,” Tuck says.

Cofounders Tuck and Cantrill met in 2010 while working at cloud computing company Joyent before Samsung bought it in 2016. Tuck previously spent eight years at Dell as a sales executive. Cantrill was a distinguished engineer at Sun Microsystems (acquired by Oracle for $7.4 billion) for over a decade. In 2017, when Meta touted its latest server racks at the annual Open Computer Project Summit, the cofounders had one immediate question: where could they buy them? “And it turned out, for all that innovation, it was not for sale. It was under lock and key,” Tuck recalls. In 2019, they decided to build it themselves.

But when they took their idea to venture capitalists in 2019, they were met with a wave of rejection. One VC turned them down within 45 seconds of a pitch. Another founder called their company a “suicide mission.” The idea that companies would want to own their hardware was a confusing one at the time, because SaaS businesses had such high gross margins. “It was a fever pitch for SaaS, and we tried to let people know that that software as a service needs to run somewhere and that it shouldn’t be exclusively the public cloud,” Cantrill says. Today, Oxide has raised about $800 million in capital.

Despite Oxide’s surging revenue and valuation, it’s still unclear if the duo’s bet will pay off. Cloud titans like Amazon and Google continue to see their businesses skyrocket from AI demand. Neoclouds like CoreWeave and Crusoe are cutting into the market, letting businesses rent compute at a fraction of the cost. Even Tuck admits that owning infrastructure isn’t for everyone, especially for smaller companies. Another roadblock: Oxide’s server racks currently don’t include GPUs. Instead they use AMD’s CPUs. While several AI workloads like browsing the web can be done on CPUs, more complex tasks like training need to be done on GPUs. Cantrill says the company wants to add GPUs to its offerings but it’s waiting to partner with the right company. “We’ve been really rooting for AMD,” he says.