Shares in “neocloud” companies slid further on Monday after Elon Musk warned that many of them face “guppy-level death.” These firms rent out AI computing power from data centers, and investors are increasingly worried about the debt they have taken on to build them.
CoreWeave and Nebius Slide Again After Musk’s Warning
CoreWeave and Nebius have both fallen more than 30% over the past month. In early premarket trading on Monday, CoreWeave was down another 5% and Nebius was down 3%, while Iren slipped nearly 3%.
The latest drop followed a string of X posts from Musk on Sunday evening. He said debt markets have almost entirely shut off access to money for any company without substantial revenue independent of AI data centers.
That means the 200-plus neoclouds will see consolidation and failures, he said, adding that “some will make it through, but not many.” He noted that SpaceX has closed $40 billion in debt to buy GPUs, but earns money from Starlink and rocket launches. When a user suggested he wanted to buy neoclouds cheaply, he replied that SpaceX is not buying any.
Nvidia CEO Jensen Huang remains bullish, saying demand is “off the charts.” However, a Bernstein Research report estimates only about 35% of announced US data center capacity will actually be built.
