CRWV, NBIS and IREN bounce back overnight after brutal week – but industry executives reportedly see only a few survivors from Neocloud

• Industry executives expect only seven to 10 of the hundreds of neocloud operators to survive, according to The Information.

• Nscale is facing investor resistance to its proposed $30 billion IPO valuation.

• Retailer sentiment toward CoreWeave, Nebius and IREN became “extremely optimistic” on Sunday.

Shares of neocloud operators rose this weekend after a market week driven by concerns about the sustainability of their business models and macroeconomic triggers such as higher-than-expected inflation.

CoreWeave (CRWV) stock rose 2.6% overnight Sunday, while Nebius (NBIS) rose 3.8% and IREN gained 3.3%.

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CoreWeave shares fell more than 20% Monday through Wednesday, before gaining 6% Thursday thanks to support from Nvidia (NVDA) CEO Jensen Huang. The slide reflects declines in the neocloud sector, including Nebius NBIS and IREN.

Investor confidence in AI infrastructure stocks, from semiconductor makers to cloud providers, has weakened amid higher financing costs and growing doubts about how quickly the technology will generate returns.

Industry executives expect only seven to 10 of the hundreds of neoclouds to survive, with Nvidia supporting them with easier credit terms, site selection and $20 billion in leases, according to a report published Sunday in The Information.

Nscale faces difficulties regarding the valuation of its IPO

The selloff has spread to other segments of the market. Data center operator and cloud computing company Nscale is reportedly facing opposition to the $30 billion valuation it is seeking for its IPO, Bloomberg reported Sunday, citing people familiar with the matter.

A group of investors recently insisted that a valuation between $16 billion and $19 billion would be more likely to attract buyers. The report was released after Microsoft, one of the company’s largest customers, pulled out of a deal with a UK data center after the site faced delays due to power constraints.

CoreWeave Bond Price Drop Triggers Rout

Bloomberg reported last Wednesday that CoreWeave’s unsecured debt maturing in 2032 had fallen below 80 cents on the dollar, a level widely considered the threshold for financial stress. At the same time, research firm Gartner released a report saying it expects 80% of neocloud operators will not survive by 2030, causing panic in the industry.

Tech investor Chamath Palihapitiya, founder of investment firm Social Capital, denounced CoreWeave’s surge in returns Tuesday evening. Elon Musk, CEO of Tesla and SpaceX, answered “yeah.”

CoreWeave CEO Mike Intrator reportedly told staff that the market was acting “irrationally” and that he remained confident in the AI ​​cloud computing company’s business model, with several analysts supporting this view.

Detailed view of Neocloud shares

On Stocktwits, retail sentiment for CRWV, NBIS and IREN has risen sharply over the past week and was “extremely bullish” as of Sunday evening.

The market may be overestimating CoreWeave’s debt and financing risks while overlooking its large order book, operational size and customer prepayments on about 70% of recent deals, one retail trader said.

“Does CRWV have debt? Absolutely. Is capital structure something to watch closely? Absolutely. But there’s a big difference between “highly leveraged” and “the company is bankrupt.” Jensen Huang says CRWV’s cost of capital is actually falling, Cantor sees it as one of the best entry opportunities, and now Truist is fending off the financial panic,” they said.

Among the Neocloud group, traders seemed the most optimistic about Nebius. “$NBIS Everything should be fine! I’m going to double my position now. Like I said before, I think this will recover faster than any other beaten down AI stock. The FUD is way over the top,” one trader posted.

Year to date, CRWV is now down 14.3%, while IREN is down 28.5%. NBIS is up 98%.

For updates and corrections, email newsroom(at)stocktwits(dot)com.

Yuvraj Malik has no position in any of the stocks mentioned in this article. Content from the StockTwits News Team is for informational purposes only and is not intended as investment advice. To learn more, see our editorial policy. This article was originally published on StockTwits.

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