Debt and falling shares put AI ‘neocloud’ firms under pressure

Neocloud companies that rent computing power to major artificial-intelligence firms are facing growing investor concern over their debts and exposure to any slowdown in AI spending. Their recent share-price falls and setbacks are sharpening questions about the financial risks behind the boom.

The firms operate large data centres packed with computing equipment, which they lease to companies including Anthropic, OpenAI and Meta. They often borrow against customer contracts and the chips they buy, while paying for hardware upfront.

CoreWeave, one of the sector’s biggest names, had $35.1bn in debt, according to analyst Cory Johnson. He said lenders may weigh the creditworthiness of major customers such as Microsoft and Meta when deciding whether to lend to the company.

Shares in CoreWeave fell by about a quarter over the month before the BBC report, while Nebius, IREN and Applied Digital also lost roughly that much or more. The report said debt investors were seeking higher returns from several companies in the sector.

The pressure has coincided with large technology companies signalling less AI spending than Wall Street analysts had expected. Shares in several neocloud firms fell after Microsoft and Google gave those forecasts, the BBC reported. Microsoft also cancelled a deal with British firm Nscale amid power-supply issues that could persist until 2030, while Australian company Firmus shelved plans to sell shares to the public.

Neocloud companies have benefited from demand for computing capacity, but their fortunes depend heavily on the spending plans of major AI developers and data-centre operators. Forrester analyst Charlie Dai said the model carried greater financial risk if those customers changed their plans.

Some companies began in cryptocurrency mining, using infrastructure that could later support AI workloads. CoreWeave was founded in 2017 to mine Ethereum; IREN, Core Scientific and Applied Digital also have crypto-mining roots. Nebius, formerly known as Yandex NV, separated from Russia’s Yandex and adopted its current name in 2024.

The outlook is contested. Gartner analysts predict that 80% of neocloud firms will cease independent operations by 2030, while Forrester expects at least three to be acquired soon as their finances weaken. By contrast, analysts at Yorkville Ives said demand for computing power still exceeded supply and that neoclouds were filling a gap larger data-centre operators could not.

US Treasury Secretary Scott Bessent played down the sector’s significance, calling it “a small component of the overall ecosystem” in a CNBC interview. CoreWeave chief executive Mike Intrator has described the market’s reaction as “irrational” and expressed confidence in the company’s business model.

The wider risk, analysts say, is that a sharp pullback in AI investment would hit firms whose borrowing and expansion depend on continued demand. Bradley Tusk of Tusk Ventures said neoclouds would face “collateral damage” if an AI bubble burst; the scale of any fallout remains uncertain.