Nebius, CoreWeave and Iren shares fell in premarket trading on Monday after Elon Musk said more than 200 companies in the sector could collapse. The sector already faces investor doubts about debt-fueled expansion and AI infrastructure returns.
Shares of Nebius, CoreWeave and Iren all dropped more than 4% in premarket trading on Monday, after Elon Musk said that more than 200 companies in the sector could collapse. The move added pressure to a group that investors already question over its borrowing and the returns on its AI buildout.
Musk points to shut debt markets
Musk, CEO of SpaceX and Tesla, wrote on X on Sunday that debt markets had almost entirely shut off access to money for any company without substantial revenue independent of AI data centers. He added that the 200+ neoclouds are going to see "guppy-level death and consolidation", and that some will make it through, but not many.
SpaceX operates its own data centers and sells computing capacity, which makes it a direct competitor to the neoclouds that also rent compute.
Investors already worried about AI debt
Musk was replying to a post by Chamath Palihapitiya, founder of Social Capital. Palihapitiya suggested that 2027 will be a turbulent year that clears out bad bets and brings consolidation for a few companies.
The stocks had already fallen over the past month. CoreWeave and Nebius are down more than 30%, while Iren has tanked 40%. The sell-off began earlier this month after the spread on CoreWeave's five-year credit default swaps hit levels generally viewed as signs of distress.
CoreWeave's bond yields also climbed. Investors have grown jittery over companies that borrow heavily to buy expensive Nvidia chips, build data centers and rent out computing power.
Source: CNBC
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