Neocloud debt crisis threatens Wall Street's AI boom

Fears of an AI investment bubble have intensified as investors lose confidence in "neocloud" companies that borrowed heavily to build data centres, triggering sell-offs that threaten the broader stock market boom. Shares in major players like CoreWeave have fallen sharply amid concerns about their ability to service debt. CoreWeave, the largest neocloud, has raised $32 billion in debt and equity but recorded only $4.6 billion in revenue in the first half of the year, with HSBC analysts estimating its investment returns at 8.9 percent, below borrowing costs. Rising interest rates and more selective AI customers have compounded pressures, with some debt interest rates briefly hitting 16 percent. Analysts warn the sector risks a "death spiral" if revenues fail to cover debt obligations, with Gartner predicting $3.5 trillion in AI infrastructure spending could be written off by 2030. Citadel's Ken Griffin said the market is "almost certainly" in a bubble, while some predict 80 percent of neoclouds will cease independent operations.