These firms you've never heard of are feeding fears the AI bubble could burst — SkimNews
Get the Tech newsletter
Daily tech — startups, AI labs, chips, the launches that shape the next decade. Free.
- CoreWeave accumulated $35.1bn in debt by leveraging long-term lease contracts with major tech firms and AI chips as collateral, with lenders reportedly weighing the creditworthiness of its customers like Microsoft and Meta
- CoreWeave, Nebius, IREN, and Applied Digital** have each lost about a quarter or more of their stock value over the past month as investor confidence wavers
- Neocloud firms often originated in crypto mining, including CoreWeave, IREN, Core Scientific, and Applied Digital, which repurposed their infrastructure for AI after the 2022 ChatGPT breakthrough
- Nebius, formerly part of Russia’s Yandex NV, split off and rebranded in 2024 and is now a key player among neocloud firms serving major AI developers
- Analysts at Gartner predict that by 2030, 80% of neocloud firms will cease independent operations, while Forrester expects imminent acquisitions as financial pressures mount
- Debt investors are demanding higher returns from several neocloud firms, signaling growing concern over their ability to service debt as interest rates rise
- Microsoft and Google’s recent forecasts of lower-than-expected AI spending triggered sharp declines in neocloud firm shares, exposing their dependence on hyperscaler spending plans
Why it matters: The neocloud sector’s heavy reliance on debt and Big Tech spending makes it highly vulnerable to shifts in AI investment. With CoreWeave alone holding $35.1bn in debt and stocks already down 25%, any slowdown in AI development directly threatens their survival, risking a wave of consolidation or collapse.
Ask SkimNews
