Neocloud debt raises concerns over AI infrastructure boom

Neocloud companies such as CoreWeave and Nebius, which lease computing infrastructure to major AI developers, face growing questions about their financial resilience. Gartner predicts that by 2030, 80% of neocloud firms will cease independent operations. Their dependence on borrowing and a concentrated group of technology customers leaves them exposed to shifts in spending.

The companies typically finance expensive hardware using long-term customer contracts and AI chips as collateral. CoreWeave has accumulated $35.1bn (£26.3bn) in debt, according to analyst Cory Johnson. Its stock has lost a quarter of its value over the past month, while Nebius, IREN and Applied Digital have suffered comparable or steeper declines. Debt investors are also demanding higher returns. CoreWeave CEO Mike Intrator has called the market’s response irrational and defended the business model.

Several providers began in cryptocurrency mining, repurposing infrastructure as demand for AI computing grew. That demand still exceeds supply, according to Yorkville Ives analysts, but financing and operational risks are mounting. Microsoft recently cancelled a deal with British provider Nscale amid power supply issues, while Australia’s Firmus shelved plans to sell shares publicly. Lower-than-expected spending forecasts from Microsoft and Google have added pressure, underscoring the sector’s vulnerability to customer decisions.