Neocloud firms shed a quarter of market value as AI spending outlook wobbles

Shares in CoreWeave, Nebius, IREN and Applied Digital have each lost roughly a quarter of their value over the past month, as investors reassess the financial stability of neocloud firms — the data-centre companies that lease computing capacity to major AI developers.

The sell-off accelerated after Microsoft and Google forecast lower AI spending than Wall Street analysts had projected, triggering tumbles across the sector. CoreWeave, the industry leader, carries $35.1 billion in debt; analyst Cory Johnson of The Quiet Period IPO research outfit explained that hardware must be paid for up front, and lenders often assess the creditworthiness of CoreWeave's customers — including Microsoft and Meta — rather than the company itself.

Gartner analysts predict that by 2030, 80% of neocloud firms will cease independent operations. Forrester VP and principal analyst Charlie Dai expects at least three to be acquired imminently as their finances get shaky, and describes the trade-off of their business model as "greater financial risk" in the face of any shift in Big Tech spending.

Treasury Secretary Scott Bessent sought to calm markets on Thursday, calling neocloud firms "a small component of the overall ecosystem" on CNBC. CoreWeave CEO Mike Intrator said the market was acting "irrationally."

Recent setbacks compound the concern: Microsoft cancelled a deal with British neocloud firm Nscale over power supply issues expected to last through 2030, and Australia's Firmus shelved its planned public share offering.