These firms you've never heard of are feeding fears the AI bubble could burst

CoreWeave, Nebius, and other neocloud firms that lease computing infrastructure to major AI developers face mounting investor skepticism over their financial viability and leverage.

The sector has lost investor confidence rapidly. CoreWeave stock fell 25% in the past month. Shares in Nebius, IREN, and Applied Digital shed similar amounts. Debt investors are demanding higher returns from several firms, signaling concern about creditworthiness.

CoreWeave, the industry leader, carries $35.1 billion in debt. Analyst Cory Johnson of "The Quiet Period" said lenders often weight the creditworthiness of CoreWeave's customers, like Microsoft and Meta, more heavily than the company's own financials when approving loans. The business model relies on long-term lease contracts with customers as collateral, plus AI chips, to finance operations.

Gartner analysts predict 80% of neocloud firms will cease independent operations by 2030. Forrester experts expect at least three to be acquired soon as finances weaken. Elon Musk suggested more than 200 neoclouds could face "guppy-level death and consolidation."

Recent corporate developments have added to the unease. Microsoft cancelled a deal with British neocloud firm Nscale due to power supply issues lasting through 2030. Australia's Firmus shelved plans to go public. When Microsoft and Google forecast lower AI spending than Wall Street expected this week, neocloud shares tumbled.

CoreWeave CEO Mike Intrator called the market reaction "irrational" and expressed confidence in the business model. Treasury Secretary Scott Bessent described neocloud firms as "a small component of the overall ecosystem" on Thursday.

The sector's future depends partly on whether major AI companies like Anthropic and OpenAI maintain spending and go public as expected. Analyst Melissa Otto at S&P Global said AI spending remains high. Yorkville Ives analysts noted demand for computing power still exceeds supply. But if AI proves a bubble, analyst Bradley Tusk said neocloud firms "are definitely going to face collateral damage."