Neocloud shares fall after Musk predicts sector consolidation

Shares of neocloud companies fell on Monday after SpaceX CEO Elon Musk predicted widespread consolidation and failures in the sector, intensifying concerns about a growing gap between AI infrastructure spending and revenue generation. Musk said over 200 neoclouds would face "guppy-level death and consolidation," a view echoed by analysts who noted high capital costs make returns unattractive. CoreWeave defended its financing prospects, citing differentiated technology, while Gartner flagged the firm as most exposed to rising leverage. Brokerages project AI spending could exceed a trillion dollars next year, with debt concerns compounded by rapid asset depreciation and potential Fed rate hikes. Bonds from Nebius and CoreWeave hit record lows, and shares of several firms have dropped over 30% this month.