Is GPU Cloud Cheaper Than Buying Physical Servers? (2026 Analysis)
GPU cloud is cheaper for workloads under 40-50% utilization or projects shorter than 12 months. For sustained 70%+ utilization over 24+ months, owning physical GPUs costs 40-60% less than cloud after depreciation, power, and maintenance.
- Cloud Break-Even: 12-18 months at 70%+ utilization
- H100 Cloud Rate: $2.85/hr median (range: $2.10-12.29)
- H100 Purchase: $40,000 SXM5 / $30,000 PCIe
- Monthly Power Cost: $180-720 depending on region
Compare Cloud vs Physical Costs
Configure your GPU requirements below. See TCO comparison, break-even analysis, and get a recommendation for your use case.
GPU Configuration
Cloud Provider
Current H100 rate: $2.35/GPU-hour
Physical Deployment
GPU Cloud vs Physical Server: Cost Breakdown
| Cost Component | GPU Cloud | Physical Server (Owned) | Leased GPU |
|---|---|---|---|
| Upfront Cost | $0 | $40,000 (H100 SXM5) | $0 - First/last month |
| Hourly Rate | $2.85/hr median | $0.25-0.40/hr (all-in)* | $2.40-3.20/hr |
| Monthly (70% util.) | $1,438 | $126-201 | $1,209-1,613 |
| Power Included | Yes | No (+$180-720/mo) | Varies |
| Maintenance | Included | Your responsibility | Included |
| Depreciation Risk | None | 35-40% Year 1 | Lessor bears risk |
| Flexibility | Scale up/down instantly | Fixed capacity | Term commitment |
*All-in owned cost includes: depreciation (over 3 years), power ($0.05/kWh), cooling, and maintenance. Based on GLRI data, January 2026.
What Is the Break-Even Point for Cloud vs Buying?
14,000
GPU-hours to break-even
At $2.85/hr cloud vs $40K purchase
12-18
Months at 70% utilization
Including power + depreciation
40-60%
Savings after break-even
Owned vs cloud over 3 years
Break-Even Formula
Break-Even Hours = (Purchase Price + Setup Costs) / (Cloud Rate - Owned Hourly Cost)
For H100: $40,000 / ($2.85 - $0.35) = ~16,000 hours ≈ 22 months at 100% util, or 14 months at 70% util accounting for residual value recovery.
Which Cloud Providers Have the Cheapest GPU Rates?
| Provider | H100 Rate | Type | Min Commit | Best For |
|---|---|---|---|---|
| Lambda Labs | $2.49/hr | On-demand | None | ML training, research |
| CoreWeave | $2.49/hr | On-demand | None | Batch training, inference |
| RunPod | $2.89/hr | Spot | None | Interruptible workloads |
| Vast.ai | $2.10-4.00/hr | Marketplace | None | Cost-sensitive, variable |
| GCP | $10.35/hr | On-demand | None | Enterprise, GCP ecosystem |
| AWS | $12.29/hr | On-demand | None | Enterprise, AWS ecosystem |
When Should You Choose Cloud vs Physical?
Choose GPU Cloud When:
- ✓Utilization is <50% (intermittent workloads)
- ✓Project duration is <12 months
- ✓You need to scale rapidly (burst training)
- ✓Your team lacks ops capacity for hardware
- ✓You're testing/prototyping new models
Choose Physical/Leased When:
- ✓Utilization is >70% consistently
- ✓Commitment is >24 months
- ✓Monthly GPU spend exceeds $50,000
- ✓You have access to cheap power (<$0.04/kWh)
- ✓Workloads are predictable (production inference)
How Does Power Cost Affect the Decision?
Power cost dramatically impacts owned GPU economics. An H100 draws 700-1000W under load. Here's the monthly power cost by region:
$180
ERCOT (TX)
$0.03/kWh
$360
PJM (VA)
$0.06/kWh
$540
Oregon
$0.09/kWh
$720
California
$0.12/kWh
Impact on Break-Even
The $540/month difference between ERCOT and California power costs shifts break-even by 3-6 months. At California rates, cloud may remain cheaper even at 60%+ utilization. Use our ERCOT tracker to find low-power-cost locations.
Our Methodology
This cost comparison is based on:
- Cloud pricing: 15 GPU cloud providers tracked via GLRI (updated weekly)
- Hardware costs: NVIDIA distribution pricing + secondary market transactions
- Power rates: EIA commercial rates by state + wholesale ERCOT/PJM data
- Depreciation: Based on 500+ secondary market transactions (see depreciation calculator)
- Last updated: January 8, 2026
Limitations: Actual costs vary by configuration, region, and negotiated rates. Enterprise cloud contracts often include 20-40% discounts not reflected in list prices.
Frequently Asked Questions
Is GPU cloud cheaper than buying physical servers?
GPU cloud is cheaper for workloads under 40-50% utilization or short-term projects (<12 months). For sustained 70%+ utilization over 24+ months, owning physical GPUs typically costs 40-60% less than cloud after accounting for depreciation, power, and maintenance.
Should startups use GPU cloud or buy hardware?
Startups should use GPU cloud for flexibility and lower upfront costs. Transition to leased/owned hardware when: (1) monthly GPU spend exceeds $50,000, (2) utilization is consistently >60%, (3) workloads are predictable for 12+ months.
What costs are included in GPU TCO?
GPU TCO includes: hardware purchase/lease, power consumption (700W-1000W per H100), cooling, rack space, networking, maintenance, depreciation (35-40% year 1), staffing, and opportunity cost of capital.
Which cloud providers have the cheapest GPU rates?
As of January 2026: Lambda Labs ($2.49/hr), CoreWeave ($2.49/hr), and RunPod ($2.89/hr spot) offer the cheapest H100 rates. AWS ($12.29/hr) and Azure ($11.60/hr) are most expensive but offer enterprise features.
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