Neocloud stocks slid in premarket trading. Nebius, CoreWeave, and Iren fell 5%; Applied Digital, Cipher Mining, Hut 8, and TeraWulf fell 3%; Galaxy Digital and Core Scientific fell 2%.
The SpaceX CEO took a hard stance on the future of neoclouds — cloud companies like CoreWeave and Nebius, that specialize in providing computing power for AI — in a Sunday X post.
He wrote that debt markets are reluctant to finance any company that relies almost entirely on AI data centers for revenue. He said SpaceX has secured $40 billion in debt to buy GPUs, but unlike neoclouds, his company earns revenue from its Starlink and rocket-launch activities.
"That means the 200+ neoclouds are going to see guppy-level death and consolidation," he wrote. "Some will make it through, but not many."
Musk's post was in reply to one by venture capitalist Chamath Palihapitiya, who wrote on X that neoclouds are "disorganized and poorly capitalized."
Replying to another X thread speculating if he was trying to drive down the prices of neocloud stocks and scoop them up for cheap, Musk replied, "SpaceX is not buying any neoclouds. Pointless."
This comes as the stocks of neocloud companies have taken hits recently amid fears of high debt levels and a lack of other revenue streams. CoreWeave's stock has dropped about 37% in the past month, while Nebius' has dropped 30% in the same time.
Nvidia CEO Jensen Huang, however, has maintained that demand for AI cloud infrastructure is "off the charts." Nvidia is a major backer of neocloud companies like CoreWeave, Nebius, Iren, Lambda, and others.
Another point that Musk added, in a separate X reply on Friday, was that the industry would see a lot of "stranded compute in partially complete data centers."
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