Neocloud debt raises concerns over computing boom

Neocloud firms such as CoreWeave and Nebius are facing growing scrutiny over the financial sustainability of their businesses. These specialist data centre operators lease computing infrastructure to AI developers including Anthropic, OpenAI and Meta, often borrowing against long-term customer contracts and expensive chips to fund hardware purchases.

CoreWeave has accumulated $35.1bn (£26.3bn) in debt, according to analyst Cory Johnson. Its shares have lost a quarter of their value over the past month, with Nebius, IREN and Applied Digital suffering similar or steeper declines. Debt investors are also demanding higher returns. CoreWeave chief executive Mike Intrator has described the market as acting irrationally and expressed confidence in the business.

The sector is vulnerable to changes in customers’ spending plans and continued access to borrowing. Gartner predicts that by 2030, 80% of neocloud firms will cease independent operations, while Forrester expects at least three imminent acquisitions as finances weaken. Several operators have roots in cryptocurrency mining and repurposed their infrastructure as demand for AI computing grew.

Analysts at Yorkville Ives say computing demand still exceeds supply, leaving neoclouds an important role. However, Microsoft recently cancelled a deal with British operator Nscale amid power supply issues, while Australia’s Firmus shelved plans to sell shares publicly. Those setbacks add to concerns about infrastructure constraints and the sector’s exposure to a potential AI downturn.